Defence stocks rise up to 5% in weak market; HAL, GRSE, BEML, BEL, Paras Defence lead

Shares of defence companies were flashing in green on Friday, with index heavyweights Hindustan Aeronautics (HAL) , Bharat Dynamics (BDL) , Bharat Electronics (BEL) , and others rising by up to 5% in an otherwise weak broader market. The rise in domestic defence stocks can be attributed to escalated geopolitical tensions in the Middle East. The Israeli airstrikes on Iran have ignited fears of a broader regional conflict, prompting investors to flock to military-linked counters.

The Nifty India Defence index, which tracks the performance of listed defence stocks, was up 2.5%, with 17 of the 18 constituents trading higher; only Cyient DLM dropped marginally by 0.7%. The top five gainers on the index were Zen Technologies, Unimech Aerospace and Manufacturing, Garden Reach Shipbuilders & Engineers (GRSE) , BEML , and Paras Defence & Space Technologies, rising in the range of 4-5%.

The index heavyweight HAL rose up 2.4%, while other state-owned defence entities BEL, Cochin Shipyard , BDL, Mishra Dhatu Nigam limited (Midhani), and Mazagon Dock Shipbuilders gained between 3% and 4%.

Among others, Data Patterns, Astra Microwave Products, Solar Industries India, and Dynamatic Technologies also saw a surge in buying activity.

Meanwhile, the domestic benchmark indices, the BSE Sensex and the NSE Nifty, witnessed sharp selling pressure on Friday, falling by up to 1% in early trade. At the time of reporting, the 30-share Sensex was trading at 80,964, down by 728 points, or 0.91%, while the Nifty50 had dropped 220 points, or 0.88%, to 24,667.

Among the BSE Sensex pack, barring Tech Mahindra and Tata Consultancy Services (TCS), all other 28 stocks were trading in negative terrain, led by Adani Ports, State Bank of India, Bajaj Finserv, UltraTech Cement, and Eternal (Zomato), sliding by up to 3%.

Beyond the immediate geopolitical trigger, the Indian defence sector is also benefiting from robust long-term tailwinds. In the past one month, defence stocks have seen a strong rally, with sectoral leaders HAL, BEL, BEML, and others rising by up to 45% amid heightened investor interest in the backdrop of escalated geopolitical tensions between India and Pakistan after Operation Sindoor.

According to analysts, renewed investor interest has been fuelled by a combination of rising defence budgets, strong order books, and the government’s continued push for indigenous defence manufacturing. The government's accelerated push for "Aatmanirbhar Bharat" in defence, coupled with a massive ₹16 lakh crore domestic procurement pipeline and a ₹3 lakh crore defence export target by 2029, provides a strong fundamental basis for growth.

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