Budget 2026: Defence stocks slide despite higher FY27 outlay as Budget falls short of market expectations
Budget 2026: Defence stocks slide despite higher FY27 outlay as Budget falls short of market expectations
MTAR Technologies was the lone gainer, rising 5.75% to ₹3,100, while most other stocks ended deep in the red
Defence and aerospace stocks came under sharp selling pressure on Sunday, with losses spread across the pack, as the Union Budget for FY26–27 failed to meet investor expectations for the sector.
MTAR Technologies was the lone gainer, rising 5.75% to ₹3,100, while most other stocks ended deep in the red. Cyient DLM fell 2.55% to ₹365, and Solar Industries declined 3.02% to ₹13,073. Losses deepened further in Unimech (down 3.28% at ₹852), Bharat Forge (down 3.77% at ₹1,387) and Astra Microwave Products (down 4.34% at ₹940). Heavyweights also saw strong selling pressure, with Hindustan Aeronautics sliding 5.40% to ₹4,370, Dynamatic Technologies dropping 5.77% to ₹8,290, and BEML falling 5.84% to ₹1,690. Bharat Electronics slipped 6.02% to ₹421.95, while shipbuilders Cochin Shipyard and Garden Reach Shipbuilders & Engineers declined 6.34% and 8.65% to ₹1,554.60 and ₹2,525, respectively. Other notable laggards included MIDHANI (down 6.69% at ₹350.15), Data Patterns (down 6.98% at ₹2,485.20), Zen Technologies (down 7.11% at ₹1,315), Mazagon Dock Shipbuilders (down 7.51% at ₹2,379.80) and Paras Defence (down 8.25% at ₹653.95), while Bharat Dynamics was the worst performer, tumbling 10.41% to ₹1,378.
Budget 2026 for defence
The capital outlay for defence saw a sharp rise of 21.84%, increasing from ₹1.80 lakh crore in FY25–26 to ₹2.19 lakh crore in FY26–27. This higher allocation comes as the defence ministry prepares for major projects, including contracts for Rafale fighter jets, submarines, and unmanned aerial vehicles.
The defence services (revenue) budget allocation is at ₹3,65,478.98 crore, while capital outlay is at ₹2,19,306.47 crore, a rise of 17.24% and 21.84%, respectively. The defence pension allocation has also gone up, with the Centre earmarking ₹1,71,338.22 crore.
However, the defence budget (civil) allocation has been slightly reduced by 0.45% compared to last year’s ₹28,554.61 crore.
To support the defence manufacturing ecosystem, Union finance minister Nirmala Sitharaman also announced a customs duty exemption. “It is proposed to exempt basic customs duty on raw materials imported for the manufacture of parts of aircraft to be used in maintenance, repair or overall requirements by units in the defence sector," she said.