June 17, 2025 | Defence Markets | Market Trends Amid Geopolitical Volatility
Indian defence stocks surged on June 17, 2025, as the Israel-Iran conflict entered its fifth consecutive day, intensifying investor focus on companies likely to benefit from rising global defence spending and long-term strategic procurement. The Nifty Defence Index rose over 1.3% to hover near 8,982, supported by a broad rally across shipbuilders, missile manufacturers, and defence electronics firms. The move comes on the back of a growing perception that geopolitical instability will accelerate both domestic and export-driven order flows, positioning India’s defence sector for a structural upcycle.
Mazagon Dock, Data Patterns, BDL Lead Defence Rally Amid Renewed Conflict Fears
Leading the charge, shares of Mazagon Dock Shipbuilders jumped nearly 5% to ₹3,322, snapping a four-day losing streak as investor sentiment turned bullish following recent geopolitical escalations. The stock had seen some profit booking earlier this month after a record rally, but the resurgence in tensions in the Middle East renewed buying interest. Data Patterns, a key supplier of indigenous defence electronics, rose 2.5% to ₹3,035, while missile systems manufacturer Bharat Dynamics Limited (BDL) and Garden Reach Shipbuilders & Engineers (GRSE) gained over 2% each. Cochin Shipyard also saw a 1.7% uptick, reflecting broad-based buying across key defence PSUs.
Highlights
Mazagon Dock rallies 5% to ₹3,322, breaking profit-taking trend.
Data Patterns and BDL each rise over 2%, supported by investor demand.
Nifty Defence Index up 1.3%, reflecting geopolitical tension-led optimism.
Stocks see renewed interest after easing of Indo-Pak tensions and Middle East escalation.
Also Read : RBI Governor Sanjay Malhotra Signals Potential Rate Cuts If Inflation Eases Further
Middle East Turmoil Reignites Focus on Global Defence Stocks
The spike in defence equities coincides with escalating hostilities between Iran and Israel, with both nations continuing missile exchanges that have led to mounting civilian and military casualties. Former U.S. President Donald Trump called for mass evacuation of Tehran and reiterated his hard stance on preventing Iran from acquiring nuclear weapons. Trump, who left the G7 Summit early, publicly contradicted French President Emmanuel Macron’s suggestion of a possible ceasefire negotiation, posting that his reasons for leaving were unrelated and “much bigger” than peace talks. These developments have reignited fears of further escalation across the oil-rich Middle East, a region critical to global energy supply chains and defence alliances.
Highlights
Iran-Israel conflict intensifies into fifth day with heavy missile exchanges.
Trump urges evacuation of Tehran, denies ceasefire engagement with Macron.
Tensions boost investor confidence in global and Indian defence sectors.
Risk of expanded conflict supports defence-related equity inflows.
India’s Domestic Defence Push Adds Momentum to Sectoral Optimism
The ongoing rally in defence stocks isn’t solely driven by external conflicts. Recent military operations by India, including May’s Operation Sindoor targeting terror outfits in Pakistan, reinforced domestic demand for indigenous defence platforms. India’s current defence expenditure remains modest at 1.9% of GDP, but analysts forecast a significant ramp-up over the next decade. Economist Sankhanath Bandyopadhyay from Infomerics Ratings noted the government could raise defence spending to 3–4% of GDP by 2035. Moreover, export targets of ₹25,000 crore by FY26 and ₹3 lakh crore by FY29 underpin the structural growth story for defence-focused companies.
Highlights
India’s defence spending likely to rise from 1.9% to 3–4% of GDP over next decade.
Government sets export target of ₹25,000 crore by FY26.
Post-Operation Sindoor, focus on indigenous production fuels long-term demand.
Domestic capex pipeline worth ₹16 lakh crore anchors future order visibility.
Valuation Caution Emerges as Stocks Trade at Premium Multiples
Despite strong momentum, analysts have turned cautious on the valuations of certain defence counters. Ajit Mishra, SVP at Religare Broking, acknowledged that stocks have turned volatile following steep run-ups post-Operation Sindoor and subsequent corrections. While the long-term structural outlook remains favorable, he advised investors to be selective, focusing on firms with strong order books, execution capabilities, and financial strength. Mishra added that near-term corrections are likely due to stretched multiples, but India’s strategic focus on defence manufacturing and exports provides long-term support.
Highlights
Valuation concerns surface after sharp rallies in May and June.
Ajit Mishra advises focus on order book strength and financial resilience.
Expect short-term volatility despite long-term bullish structure.
High-growth names may correct if geopolitical drivers recede.
Export-Driven Defence Stocks Preferred by Institutional Investors
Investment research firm GoalFi’s founder, Robin Arya, emphasized the importance of focusing on export-oriented defence stocks amid the current geopolitical climate. He noted that the sector added ₹1.8 lakh crore in market capitalization during May 2025 alone, driven by strong execution, policy clarity, and global demand for Indian platforms. Arya added that India’s rise as a credible defence exporter—up from just ₹1,941 crore in 2014 to targets in lakhs of crores by 2029—supports the investment case for long-term allocation in selected defence companies.
Highlights
Export growth from ₹1,941 crore in 2014 to ₹3 lakh crore targeted by 2029.
GoalFi recommends selective exposure to export-focused defence firms.
Rising return ratios and execution efficiency justify premium valuations.
Institutional investors bullish on long-term global defence opportunity.
Broader Sector Trends and Performance Snapshot
Other notable gainers in the sector on June 17 include DCX India, Paras Defence, BEML, and Cochin Shipyard—all up over 1% intraday. Hindustan Aeronautics Limited (HAL), Solar Industries, Cyient DLM, Bharat Electronics Ltd. (BEL), and Astra Microwave Products also traded marginally higher. However, not all stocks participated in the rally. Zen Technologies and a few other counters were in the red, reflecting stock-specific profit booking or weaker fundamentals.
Highlights
DCX India, Paras Defence, BEML rise over 1%, following large-cap momentum.
HAL, BEL, and Astra Microwave show marginal upticks.
Zen Technologies trades in the red, suggesting stock-specific weakness.
Defence index performance remains skewed towards fundamentally strong names.
