Focus on Defence Stocks: Indian defence stocks have experienced a significant rise over the past fortnight, with some companies gaining up to 39% since the launch of Operation Sindoor. Notable performers include Garden Reach Shipbuilders & Engineers Ltd (GRSE), Cochin Shipyard Ltd, Mishra Dhatu Nigam Ltd (MIDHANI), Paras Defence and Space Technologies Ltd, Data Patterns (India) Ltd, Bharat Dynamics Ltd (BDL), and Astra Microwave Products Ltd, all significantly outperforming broader market indices.
During this period, the Nifty Defence index surged by 18%, while the benchmark Nifty 50 saw an increase of just over 2%. The remarkable rise in defence stocks has been tied to increased geopolitical tensions with Pakistan and Prime Minister’s renewed focus on promoting self-reliance in military manufacturing.
Operation Sindoor: Boosting Confidence in Indian Defence
Experts attribute the rise in defence stocks to the successful outcomes of Operation Sindoor, which met its strategic goals and highlighted India’s advancing military technology. The operation relied heavily on indigenous platforms, including drone technology and advanced air defence systems, thus enhancing investor confidence in the sector.
“India’s defence sector has matured significantly! The integration of advanced domestic systems into national defence was executed impressively, communicating a strong message both domestically and internationally,” remarked Manoranjan Sharma, Chief Economist, Infomerics Valuation and Ratings.
Sharma emphasized that the solid capabilities of the Indian military have greatly enhanced prospects for local defence companies. “Considering the competence of Indian products, defence stocks are fairly priced and are likely to continue rising in the new strategic landscape,” he noted.
Investor Advice Amid Rising Stocks
As investors flock to the thriving defence sector, analysts recommend a cautious approach. Kotak Institutional Equities has warned of potential “irrational exuberance,” recognizing defence as the latest momentum trade, highlighting that such narratives may be short-lived and stressing the need for strategic exit plans.
Conversely, Antique Broking expressed a positive outlook, noting a recovery in defence stocks after a significant correction period. They anticipate continued growth due to geopolitical developments and approved government orders amounting to ₹54,000 crore, recommending stocks like Mazagon Dock and GRSE. However, uncertainties regarding Cochin Shipyard’s future projects could pose challenges in the near term.
Vikas Gupta, CEO and Chief Investment Strategist at OmniScience Capital, advised long-term investors to remain composed and avoid impulsive buying. “There’s no need for fear of missing out. Monitor a watchlist of reliable stocks and invest gradually,” he proposed.
Performance Overview
The stock performance data from May 7 reveals the extent of this rally, with Garden Reach Shipbuilders increasing nearly 39%, followed by Cochin Shipyard and Zen Technologies at 36%. MIDHANI rose by 33%, and Data Patterns saw a lift of 30%. Other notable stocks like Astra Microwave Products, Bharat Dynamics, and Mazagon Dock Shipbuilders gained between 21% to 29%.
Additionally, well-known companies such as BEML, Bharat Electronics, and Hindustan Aeronautics also recorded over 12% growth, contributing to the sector’s overall momentum.
Disclaimer: The opinions and recommendations expressed here are those of various analysts or brokerage firms and do not reflect the stance of Mint. Investors should consult certified professionals before making investment choices.
