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Defence shares extend rally; GRSE, BEML, BDL gain up to 5% in weak market
Shares of defence and its related companies were in demand, and rallied up to 5 per cent on the National Stock Exchange (NSE) in Tuesday's intra-day trade in an otherwise weak market.
Garden Reach Shipbuilders & Engineers (GRSE), BEML, Bharat Dynamics (BDL), Mazagon Dock Shipbuilders (MDL), Cochin Shipyard, Hindustan Aeronautics (HAL), Apollo Micro Systems, Paras Defence and Space Technologies, Ideaforge Technology and Bharat Electronics were up in the range of 1 per cent to 5 per cent.
The Nifty India Defence index hit a fresh 52-week high of 8,674.05 on the NSE in intra-day trade today. At 09:34 AM; Defence index, the top gainer among sectoral indices, was up 1.4 per cent, as compared to 0.70 per cent decline in the Nifty 50.
Stock price of BDL, Data Patterns, Paras Defence zoom over 100% from 3-month lows
Share prices of BDL, Data Patterns, GRSE and Paras Defence have seen their market price more-than-double and zoom up to 131 per cent from their respective three-month lows.
Zen Technologies, Solar Industries, Mishra Dhatu Nigam, Astra Microwave, BEML, MDL, Ideaforge Technologies, HAL, BEL and Cochin Shipyard rallied between 65 per cent to 95 per cent.
What's driving rally in defence stocks
According to media reports, after Operation Sindoor, India's defence budget may receive an additional allocation of ₹50,000 crore under a supplementary budget. The boost will take overall defence allocation past ₹7 trillion for the financial year 2025–26.
In the Union Budget presented on February 1, Finance Minister Nirmala Sitharaman had already earmarked a record ₹6.81 trillion for the armed forces. This marked a significant 9.2 per cent increase from the ₹6.22 trillion allocated in 2024–25.
Meanwhile, the country is witnessing rapid import substitution, increased domestic production, and growing exports, leading to an inflow of higher indigenous orders to defence public sector undertakings (PSUs).
Defence industry is advancing steadily towards self-reliance driven by government policies, the Defence Research and Development Organisation (DRDO) innovations and global collaborations. The country is witnessing a rapid import substitution, increased domestic production and growing exports. This push towards indigenization is expected to boost the earnings of both public and private defense companies as many defense public sector undertakings (PSUs) are witnessing good order inflows with higher indigenous percentages.
With India achieving all its avowed strategic objectives, Operation Sindoor was an unqualified and unequivocal success; a success in which India's growing technological self-reliance played a pivotal role.
Sector Outlook
AatmaNirbhar Bharat initiative to boost defence manufacturing in India. The government emphasises on creating an environment to boost the AatmaNirbhar Bharat program in the defence sector and create a level-playing field for private players, including MSMEs, according to Mirae Asset Sharekhan.
Further, the hike in foreign direct investment (FDI) to 74 per cent through the automatic route would boost investments. This is likely to boost investments in the space, as foreign players in the defence sector would look at setting up joint ventures to establish defence manufacturing bases in India, considering the ample opportunity with the opening up of the defence sector. The government has also established defence corridors in Tamil Nadu and Uttar Pradesh, which have helped reduce the import dependency, the brokerage firm said.
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