Defence Stocks Surge for Fourth Straight Session as Global and Domestic Catalysts Align

India’s defence manufacturing sector is witnessing a sustained rally, with shares of leading companies like Bharat Electronics Ltd (BEL), Hindustan Aeronautics Ltd (HAL), and Bharat Dynamics Ltd (BDL) gaining ground for the fourth consecutive trading session. On July 1, 2025, the Nifty India Defence Index advanced over 1% intraday and has now climbed more than 3% over the past four sessions. This surge is being fuelled by a combination of fresh domestic orders, upbeat global policy cues, and strategic developments in India’s space and missile capabilities. Investors are increasingly betting on the long-term trajectory of India’s indigenous defence ecosystem, as both geopolitical shifts and internal procurement reforms converge to favour self-reliant military production.

Highlights

• Nifty India Defence Index gained over 3% in four sessions.

• BEL, HAL, BDL, DCX Systems, Mazagon Dock, and Paras Defence among top performers.

• Global and domestic defence policy tailwinds boosting investor confidence.

• Strong outlook for India’s defence sector amid rising procurement and R&D activity.

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Bharat Electronics Hits Fresh 52-Week High After ₹528 Cr Order Flow

Bharat Electronics Ltd (BEL), a Navratna public sector enterprise under the Ministry of Defence, touched a new 52-week high on Tuesday following an announcement of cumulative orders worth ₹528 crore secured since its previous disclosure on June 20. The contracts span a diverse range of technologies including radars, jammers, shelters, control centers, spares, and support services—underscoring BEL’s strategic relevance in India’s defence command and control ecosystem. The company also confirmed new deals for electronic voting machines (EVMs) and communication systems, reinforcing its critical role in dual-use civil and military technologies. This steady stream of orders has strengthened BEL’s earnings visibility and is widely seen as a reflection of robust order inflows under the Defence Acquisition Procedure (DAP) 2020. Analysts remain bullish on BEL’s pipeline, citing strong alignment with India’s Make-in-India and export-linked defence initiatives.

Highlights

• BEL secured ₹528 crore in orders for defence-grade tech and EVM systems.

• Shares touched new 52-week high amid improved order book visibility.

• Product portfolio includes radars, jammers, control centers, and shelters.

• Continued alignment with India’s indigenisation and procurement goals.

Global Tailwinds: NATO’s 5% GDP Defence Push Spurs Export Hopes

Indian defence stocks received a fresh boost from international developments as NATO member countries agreed on June 25 to raise their defence spending target from 2% to 5% of GDP by 2035. This significant shift is designed to enhance military and civil readiness in response to evolving global threats. The resolution has been widely interpreted as a precursor to increased global demand for cost-effective defence manufacturing partnerships, especially with nations like India that possess mature production capabilities and competitive pricing structures. For companies like HAL, BDL, and Mazagon Dock, this could translate into more opportunities for export contracts and joint production ventures with Western defence giants. As NATO’s new policy filters into procurement budgets over the coming decade, Indian firms are expected to benefit from Tier-1 and Tier-2 supply contracts, especially in areas such as avionics, naval systems, and missile subassemblies.

Highlights

• NATO’s new 5% GDP defence target expected to increase global procurement.

• Indian firms may benefit via joint ventures and export-oriented contracts.

• Enhanced opportunities in missile systems, naval components, and avionics.

• HAL, BDL, and shipbuilders seen as key contenders for future partnerships.

Operation Sindoor Spurs Indian Military Space Doctrine, Satellite Projects

In a strategic policy move, India is actively advancing plans to establish a military space doctrine, with proposals to launch 52 dedicated surveillance and reconnaissance satellites for defence purposes. The acceleration comes on the heels of Operation Sindoor, a high-altitude logistics and surveillance exercise conducted earlier this year that exposed the need for seamless real-time monitoring across the Indian Ocean Region and northern frontiers. The satellite initiative, which is expected to be spearheaded by ISRO in collaboration with DRDO and select private-sector defence tech firms, is being positioned as a critical pillar of India’s future warfare readiness. The enhanced surveillance grid will not only bolster national security but is also expected to open up major R&D contracts and vendor participation opportunities for listed entities such as Paras Defence and Data Patterns, which specialise in military space electronics and ground systems.

Highlights

• India plans to launch 52 military satellites to build an integrated space grid.

• ISRO-DRDO partnership to oversee execution of military space doctrine.

• Operation Sindoor exposed need for enhanced high-altitude surveillance.

• Firms like Paras Defence and Data Patterns likely to benefit from contracts.

DRDO Advances Agni-5 Upgrade with Conventional Warhead Capability

In another key development, the Defence Research and Development Organisation (DRDO) is fast-tracking work on an upgraded variant of the Agni-5 ballistic missile, which will be capable of carrying heavy conventional warheads. Unlike the current nuclear-capable variant, the conventional version is being designed for precision targeting of hardened enemy installations, including underground bunkers and fortified command posts. This move is part of India’s broader shift towards developing dual-use missile platforms that can offer strategic versatility during limited conflicts and hybrid warfare scenarios. Defence analysts note that this upgrade will significantly improve India’s conventional deterrence capabilities, while also creating opportunities for associated manufacturing contracts in propulsion systems, missile guidance modules, and payload integration. HAL and BDL, which support many of DRDO’s missile-related programs, are likely to see increased production mandates in the near-to-medium term.

Highlights

• DRDO developing an upgraded Agni-5 variant with bunker-busting warheads.

• New missile to support precision conventional strikes during regional conflicts.

• Enhances India’s strategic deterrence and dual-use arsenal capabilities.

• BDL and HAL expected to benefit from production and integration roles.

Institutional Interest Rising in Defence Counters Amid Policy Visibility

The sustained rally in defence stocks is not merely sentiment-driven; it’s underpinned by a growing institutional appetite for defence-linked equities. With several public sector and private defence firms now delivering consistent quarterly earnings, maintaining healthy order books, and enjoying policy tailwinds, foreign portfolio investors (FPIs) and domestic mutual funds are increasing their exposure. BEL, HAL, and Mazagon Dock have all seen heightened delivery volumes in recent sessions, pointing to long-term positioning. Additionally, the Indian government’s Defence Production and Export Promotion Policy (DPEPP) targets annual defence exports of ₹35,000 crore by 2030—a target that appears increasingly achievable given current momentum. As visibility improves across both domestic procurement and global demand, analysts expect sustained re-rating for high-quality defence manufacturers.

Highlights

• BEL, HAL, and Mazagon Dock seeing rising institutional buying volumes.

• Government policy aims for ₹35,000 crore in annual defence exports by 2030.

• Defence firms offering robust earnings and long-term order book visibility.

• Sector expected to undergo structural re-rating amid strong fundamentals.