Defence stocks in India surged on Friday, defying the overall weakness in the 30-share Sensex and the broader Nifty 50 indices. Investors showed strong appetite for the sector, with Apollo Micro Systems, Bharat Dynamics (BDL), Bharat Electronics (BEL), Cochin Shipyard, Garden Reach Shipbuilders & Engineers (GRSE), and Mazagon Dock Shipbuilders rising as much as 3% during intra-day trade. Notably, Paras Defence & Space Tech, a specialist in high-precision solutions for India's strategic sectors, outperformed with a jump of nearly 6%.

This rally is fuelled by high expectations surrounding the defence acquisition council (DAC) meeting scheduled for later today. Chaired by Defence Minister Rajnath Singh, this final meeting of the year is expected to be highly consequential, with reports suggesting a focus on fast-tracking key procurement proposals and emergency purchases to address evolving regional security challenges.

The high-level meeting in New Delhi will be attended by chief of defence staff (CDS) General Anil Chauhan, the three service chiefs, the defence secretary, and the chief of the Defence Research and Development Organisation (DRDO).

Key proposals on the radar

A primary item on the agenda is the emergency procurement of missiles. The Indian Navy has reportedly flagged an urgent requirement for medium range surface-to-air Missiles (MR-SAM), with projected needs extending to several hundred units. The MR-SAM is a flagship project co-developed by the DRDO and Israel aerospace industries (IAI). According to DRDO, these are advanced, all-weather, 360-degree mobile systems designed to protect ground forces and strategic assets from enemy aircraft, drones, and guided weapons.

Parallelly, the Indian Air Force (IAF) is expected to seek emergency clearance for the Astra Mk-2 air-to-air missile. With a formidable strike range of approximately 200 km, the Astra Mk-2 is a cornerstone of India’s indigenous air combat strategy. The IAF plans to integrate this missile with front-line platforms such as the Su-30MKI and the upcoming Tejas Mk-2, signaling a potential for large-scale production orders.

The market's bullish reaction reflects more than just a reaction to a single meeting; it stresses a structural confidence in India’s defence manufacturing ecosystem. As the DAC pivots toward acceptance of necessity for indigenous platforms, the revenue visibility for defence public sector undertakings and private players like Paras Defence has reached an all-time high.

Apollo Microsystems

BEL, BDL, Mazagon Dock, and other defence stocks rally ahead of year-end DAC meet