Defence Stocks Rally up to 4% Amid Border Tensions

Border Tensions Propel Defence Sector Rally Amid Operation Sindoor Impact

Shares of Indian defence manufacturing companies extended their rally on May 8, as heightened geopolitical tensions with Pakistan boosted investor sentiment toward the sector. The gains come a day after India launched precision military strikes under the codename Operation Sindoor targeting terror sites in Pakistan, triggering fears of an escalation in cross-border hostilities. The Nifty Defence Index traded nearly 1% higher during morning hours, supported by broad-based buying.

Data Patterns emerged as the top gainer with a sharp 4% rise, followed closely by MTAR Technologies, which climbed 3.6%. Other key beneficiaries included Cyient DLM and Paras Defence, both advancing more than 2.5%. Garden Reach Shipbuilders and Engineers (GRSE) and Unimech Aerospace also gained over 2%, while Mazagon Dock Shipbuilders and Bharat Dynamics rose around 1.7% each. Cochin Shipyard was up by 1.5%, while BEML, Hindustan Aeronautics Ltd (HAL), and DCX India recorded modest gains.

Highlights:

• Nifty Defence Index rose nearly 1% in morning trade on May 8.

• Data Patterns (+4%), MTAR Technologies (+3.6%), and Paras Defence (+2.5%) led gains.

• Mazagon Dock, BDL, GRSE, Unimech, and Cochin Shipyard also advanced.

• Bharat Electronics Ltd (BEL) bucked the trend, slipping slightly to Rs 310.

Strong Fundamentals, Indigenization Push Sustain Long-Term Bullish Outlook

Investor interest in defence stocks has been intensifying over the past few months, driven by the government’s aggressive push for indigenization of defence capabilities, policy incentives, and rising defence budgets. The Defence Ministry has been emphasizing self-reliance in manufacturing critical technologies, weapon systems, and platforms, a factor that continues to benefit domestic players with established order books and production capabilities.

Brokerage firm Antique Broking recently reaffirmed a bullish stance on the sector, highlighting that valuations remain reasonable following a round of profit-booking earlier this year. The correction, according to analysts, has created a fresh entry opportunity for investors with a medium to long-term outlook, especially in light of growing demand and export potential.

Highlights:

• Government push for defence indigenization and modernization remains strong.

• Brokers see valuations as attractive post recent correction in defence stocks.

• Robust order books continue to underpin confidence in long-term growth.

Defence Exports Surge to Record High; Rs 50,000 Crore Target by 2030

India’s strategic emphasis on enhancing defence exports is another key tailwind for the sector. The country’s defence exports hit a record Rs 23,622 crore in FY25, reflecting a sharp increase in overseas demand for Indian-made military hardware. Union Defence Minister Rajnath Singh has outlined an ambitious plan to scale up exports to Rs 50,000 crore by 2030, as part of India’s broader defence diplomacy and economic agenda.

With the Ministry of Defence encouraging public and private firms to ramp up global outreach, companies with scalable production facilities and international certification are expected to benefit the most. HAL, BEL, and BDL have all played a central role in driving India’s export surge, along with private entities like L&T Defence and Bharat Forge.

Highlights:

• India’s defence exports surged to Rs 23,622 crore in FY25—a record high.

• Government eyes Rs 50,000 crore in exports by 2030.

• HAL, BEL, BDL, L&T Defence, and Bharat Forge are key contributors to exports.