Sika Interplant, Data Patterns, and other defence stocks jump up to 5%. Here's why
Defence stocks like Sika Interplant Systems, Data Patterns, BEL and BEML rose up to 5% on Thursday morning after NATO allies agreed to hike defence spending. The move is being seen as a big export opportunity for Indian defence firms.
ADVERTISEMENT In a five-point statement issued on Wednesday, NATO leaders backed the big increase in defence spending that US President Donald Trump had demanded, and restated their commitment to defend each other from attack after a brief summit in the Netherlands.
The new spending target - to be achieved over the next 10 years - is a jump worth hundreds of billions of dollars a year from the current goal of 2% of GDP, although it will be measured differently.
Also Read | NATO allies agree to hike defence spending, reaffirm collective defenceCountries pledged to spend 3.5% of GDP on core defence - such as troops and weapons - and 1.5% on broader defence-related measures such as cyber security, protecting pipelines and adapting roads and bridges to handle heavy military vehicles.During the day, Sika was top gainer in the defence pack and rallied up to 5%, followed by 2-3% upsides seen in Data Patterns, Paras Defence, BEL and BEML.
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Ashika Institutional Equities said NATO's announcement is positive for Data Patterns, Zen Technologies, Paras Defence & Space Technologies, Astra Microwave, Ideaforge Ltd, HAL, BEL and BDL.
"This development opens up substantial export opportunities for Indian defence companies, which already supply a diverse portfolio of products including arms, ammunition, fuses, complete weapon systems such as the BrahMos supersonic cruise missile, artillery guns, Dornier-228 aircraft, radars, Akash air defence systems, Pinaka rockets, armoured vehicles, as well as protective equipment and uniforms," it said.
ADVERTISEMENT Further, given the prevailing geopolitical tensions, increased defence spending, and the government's emphasis on indigenization and exports, the overall outlook on the defence sector remains positive, the brokerage said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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