Defence stocks retreat after up to 84% rally in 3 months. Is it time to book profits or hold?
India's defence stocks retreated on Thursday after a sharp three-month rally, with Bharat Dynamics falling the most. The Nifty India Defence Index dropped over 2% amid profit booking and valuation concerns. Analysts, however, see robust long-term growth prospects driven by strong order inflows post-Operation Sindoor.
Tired of too many ads?
Remove Ads
Bull rally
Tired of too many ads?
Remove Ads
Defence stocks outlook
India's defence pack was under pressure on Thursday with stocks falling by up to 5% in the day's trade amid weak market sentiments and profit booking by investors. The decline follows a strong rally over the past three months with stocks rallying as much as 84%.The biggest loser of the day was Bharat Dynamics Limited , which fell to the day's low of Rs 1,887.60 on the NSE. The trigger was Motilal Oswal Financial Services (MOFSL) initiating coverage on BDL stock with a 'Neutral' rating and a target price of Rs 1,900, about 4% below its current market value, cautioning that the stock's sharp run-up leaves little room for near-term upside.The other top losers were Garden Reach Shipbuilders (GRSE), Solar Industries Zen Technologies , Data Patterns (India), Hindustan Aeronautics (HAL), Paras Defence and Space Technologies Unimech Aerospace and Manufacturing and Dynamatic Technologies , whose share prices slipped between 3.4% and 0.4%.The Nifty India Defence Index was down by over 2% around 1:30 pm. Defence stocks have had a strong run on the D-Street for the past three months. The Nifty India defence index has appreciated by over 42% with all 18 stocks riding on the bulls.Defence PSU GRSE is the top gainer with 84% returns and is followed by Data Patterns and Paras Defence which have yielded 81% and 79% returns, respectively in the same period.The rest of the stocks have also given double-digit returns. Cyient, MTAR and HAL are at the bottom of the ladder with returns of 15%, 21% and 22%, respectively.The stocks have risen on account of global geopolitical tensions, including at the Indian doorstep with near near-warlike situation with rival Pakistan, as India vowed to take a deterrent step against terrorist installations following the Pahalgam killings.The positive sentiments also rode on the overall recovery in the domestic stock markets as US President Donald Trump deferred the tariffs to a three-month period. This enabled a recovery in the domestic markets as Nift and BSE Sensex gained over 12% and 13% in the said period.With relative calm, the premium on defence stocks have come down. The recent correction has extended 1-month fall to near 4% at the index level.While defence stocks are known to move faster, valuation concerns remain a constant concern for investors.Notwithstanding the recent correction, domestic brokerage ICICI Securities projects a strong growth trajectory for the domestic companies in FY26, stating that most of the companies under its coverage have guided for >15% revenue growth, driven by robust order inflow after Operation Sindoor.In a report, this brokerage highlighted select names such as Bharat Dynamic Ltd (BDL), Solar Industries and Azad Engineering to likely post even higher growth in the range of 25–30%, the brokerage highlighted in its June defence sector digest.ICICI Securities has also named its top stock picks in the sector, listing Solar Industries, Astra Microwave and Azad Engineering as its top picks in the private space. Among defence public sector undertakings (DPSUs), it prefers Hindustan Aeronautics Ltd (HAL), Bharat Electronics Ltd (BEL) and Midhani.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
3 minutes ago
- Time of India
Electronics makers enter standby mode
Academy Empower your mind, elevate your skills Several electronics makers are reconsidering local expansion and scouting alternative overseas markets as the latest US tariffs negate India's earlier pricing edge over China, although key items – such as smartphones, tablets and laptops – remain exempted from the 50% levies announced so Industries, which makes lithium-ion cells for power banks in India, had inked a definitive agreement in January with US-based Anker to supply cells for power banks to be sold in the US. Munoth had earmarked a fourth of its capacity to supply 500,000-1 million cells a month to the US.'Currently, lithium cells are exempted from tariffs, but if Donald Trump puts tariffs on them, our US business may very well move out to other companies,' Jaswant Munoth, vice chairman, Munoth Industries, told said the US business offered a higher margin, almost double that at home, besides higher quality controls.'Losing the US would be a big loss for our financial projections, even if capacity remains utilised for domestic supply. Future revenue will surely come under question,' he US administration has levied a total of 50% (25%+25%) tariffs on imports from be sure, smartphones, laptops, tablets, servers, certain telecom equipment, integrated circuits, and flat panel display modules are among 17-18 HS codes exempted from the current tariffs. Industry estimates suggest exports of these items could be worth about $50 all other electronics products, including electric inverters, battery chargers, parts of transformers, etc., are among the 14 HS codes facing 50% leading local contract manufacturer Dixon Technologies , which had earlier said it expects a surge in mobile phone exports to the US by FY27 for its customer Motorola, is now in a wait-and-watch mode, a person familiar with the developments told ET.'Currently, there is nothing Dixon can do, honestly, but to wait,' said the person cited above. 'Nobody has an answer to this problem and companies cannot approach the government for help unless the tariff situation is definitively defined.'The person added, however, that once the US government announces its tariffs on mobile phones and other semiconductor-based products — likely by the third week of August — they will go to the government for at the Motherson group, which recently entered Apple's supply chain via a joint-venture with Hong-Kong based BIEL Crystal Manufactory, heaved a sigh of relief after they learnt that the additional $100 billion investment by Apple's partners in the US would not take away Motherson's orders.'Apple's supplier Corning will be making the cover glasses for iPhones and Apple Watches in the US going forward. We do the machining on the glass to fit the dimensions of the product. That part of manufacturing is not affected,' an executive aware of the developments told contract manufacturers, such as Amber Enterprises , said they are holding back on exports for now, and may target other regions in future.'The tariff action that is happening has obviously changed the outlook for the industry. Companies with significant export aspirations would be worried at this point due to the current geopolitical situations and tariffs,' said Jasbir Singh, chairperson, Amber said manufacturing would be needed in India with or without tariff arbitrage due to the massive domestic consumption.'The primary appeal for large multinational companies to come to India is its huge consumption potential, which is expected to continue for the next 15-20 years,' Singh said. 'Exports will be a bonus on top of the domestic market.'But industry associations, which represent the top manufacturer and electronics brands in India, remain concerned.'About 80% of our electronics export to the US is mobile phones-related, primarily fueled by Apple. They may not have to face the tariff impact after setting up manufacturing in the US,' said Ashok Chandak, president, India Electronics and Semiconductor Association (IESA). 'But other electronic products, such as medical electronics, telecom equipment, and industrial products would get significantly impacted by the duty. Optic fiber cables are also expected to attract tariffs.'Chandak said a key strategy among electronics companies involves looking for alternative markets and recalibrating export plans beyond the US. This could include Asia, Europe, and even Russia.'The overall picture is not going to be positive even after the semiconductor tariffs are announced. It will be a troublesome scenario for our sector,' he India Cellular and Electronics Association (ICEA) has projected electronics exports to touch $46-50 billion by the end of the current fiscal, from $12.4 billion in the June quarter.'The export projections do not take into account the impending sector-specific tariffs on semiconductor goods imports into the US. That said, India is unlikely to be specifically impacted with the semiconductor tariffs because imports from every other country will face the same tariffs,' said Pankaj Mohindroo, chairman, ICEA.
Mint
3 minutes ago
- Mint
India eyes policy reset to soften US tariff blow, plans ease of doing business hub for mfg, investment fillip
NEW DELHI : With the US slapping a punishing 50% tariff on Indian goods, New Delhi is changing tack that will help in the log term. Even as uncertainty looms over a bilateral trade agreement with the world's largest economy, the Indian government on its part is working on a reform-heavy game plan to increase ease of doing business, strengthen manufacturing, and keep foreign investors coming, two senior government officials directly involved in the consultations told Mint, requesting anonymity. US President Donald Trump's latest move, which will double the tariff on Indian goods from 27 August, targets $6.2 billion in garment exports, $1.3 billion in leather goods, and billions more in chemicals, pharma, shrimp and petroleum. While the textile and leather sectors face an immediate competitiveness shock, the Narendra Modi government is using the crisis to accelerate ease-of-doing-business reforms: a single-window clearance system modelled on passport services, side-letter deals with trusted partners, and streamlined land and contract processes. The officials say these measures will fortify India's manufacturing and export base and protect jobs, regardless of whether a US trade pact materialises, as the global trade order is becoming more unpredictable by the day. The new tariff regime, announced by Trump imposes a 25% penalty tariff on goods from India over and above the 25% duty that came into effect 7 August. Also Read: Modi, Putin vow to deepen bilateral partnership defying Trump tariffs Without going in for counter measures, the government is focusing on making India more self-reliant, boosting domestic manufacturing, and attracting higher investment from trusted global partners, the officials directly involved said. The emerging plan includes a series of structural steps aimed at increasing India's resilience against external shocks. 'This includes finalising side-letter arrangements with friendly trading partners for assured long-term procurement, streamlining clearances for exporters through a faceless, passport office-style system, and removing procedural hurdles that raise transaction costs," said the first of the two officials mentioned above. However, this person clarified that these structural reforms will continue even if a trade agreement with the US is eventually concluded. The government sees this as an opportunity to address long-standing procedural bottlenecks that often compel investors to rely on middlemen for basic services such as unit registration, identification of industrial land, and conversion of agricultural land for commercial use, among others. 'The prime objective is to keep the manufacturing sector on track and protect employment." 'These fundamental requirements will now be streamlined under a new centralised system," said the second official. India got foreign direct investment (FDI) worth $81.04 billion in FY25, marking a 14% rise from the previous year and maintaining its position as one of the world's leading investment destinations. Commerce ministry data showed that the services sector emerged as the top recipient of FDI equity inflows, accounting for 19% of the total, with investments rising nearly 41% to $9.35 billion in FY25 from $6.64 billion a year earlier. The government has set an FDI target of $100 billion for FY26. India ranked 63rd out of 190 countries in the World Bank's Doing Business 2020 report, the last edition published before the index was discontinued in 2021 due to data irregularities. This ranking marked a significant improvement from the 142nd position in 2014. 'A single interface—both physical and digital—is being planned, through which most of the approvals will be processed online," said the second person. 'A time slot will be allocated to investors and manufacturers upon request, allowing for in-person visits only where necessary. The model draws inspiration from the faceless passport service system and may leverage existing infrastructure such as common service centres in rural areas," the second official said, adding that the objective is to address key challenges such as enforcing contracts and registering property, as these often involve bureaucratic delays and a reliance on intermediaries. Also Read: China welcomes PM Narendra Modi's planned visit to attend Tianjin Summit of SCO Analysts have pointed to a deeper concern that the global trade order is becoming increasingly unstable. 'The entire trade dynamic has been distorted. It's becoming completely trustless. No rulebook is being followed, particularly not the WTO (World Trade Organization) framework, which was originally shaped by the US itself," said Dattesh Parulekar, assistant professor of International Relations at Goa University. 'Tariffs were earlier seen as instruments within a rules-based system, they are now being deployed as tools of pressure, in contravention of the very trade norms that the multilateral order was built upon," Parulekar added. 'The loss due to high tariffs is imminent unless the issue is resolved. Shifting the manufacturing base to a low-tariff country is also not a practical option—who knows, after a few days or months, that country may also face similar tariffs, as the entire trade dynamic has changed. Every country now wants to expand its manufacturing base and earn through exports," a senior executive from the textile industry said. Sectors hits by tariffs The US cited India's oil trade with Russia as the reason for the stinging tariffs, even though such trade is not restricted under US or UN rules. With this, India becomes one of the most heavily taxed trading partners of the US, much worse off than China (30%) or Vietnam (20%), and on par with Brazil. The textile and apparel sector, which exports about $6.2 billion worth of garments to the US annually, will be among the hardest hit. Most products in this category previously faced zero or low tariffs, but will now attract the full 50%, severely denting price competitiveness and potentially leading to order cancellations in the coming weeks. Leather goods and footwear, another labour-intensive segment, is also expected to lose ground. These exports, valued at around $1.3 billion to the US, may become unviable as buyers turn to Southeast Asian suppliers, especially Vietnam and Indonesia. Organic chemicals and pharmaceuticals are also vulnerable. India exports about $2.7 billion worth of organic chemicals and $7.2 billion worth of pharmaceutical products to the U.S. The new tariffs could impact formulations and intermediates unless exemptions are granted for essential medicines or ongoing supply contracts. Also Read: Brazil's Lula dials PM Modi amid Trump's tariff spree Shrimp exports, currently valued at $2 billion, will now face a sharp rise in duties. Despite being duty-free earlier under GSP and MFN rates, they will now attract the full 50%, making Indian seafood considerably more expensive than that from Latin American or ASEAN competitors. Even petroleum products, which contributed $4.1 billion in FY25 exports to the US, are under pressure. While already facing a 6.9% most-favoured nation duty, the new measures could restrict volumes as refiners lose pricing advantage.
Hindustan Times
3 minutes ago
- Hindustan Times
Donald Trump announces peace agreement between Azerbaijan and Armenia
Azerbaijan and Armenia signed a US-brokered peace agreement on Friday during a meeting with US President Donald Trump that would boost bilateral economic ties after decades of conflict and move them toward a full normalization of their relations. Donald Trump said the United States signed separate deals with both Azerbaijan and Armenia to expand cooperation on energy, trade and technology, including artificial intelligence.(REUTERS) The deal between the South Caucasus rivals - assuming it holds - would be a significant accomplishment for the Trump administration that is sure to rattle Moscow, which sees the region as within its sphere of influence. "It's a long time - 35 years - they fought and now they're friends, and they're going to be friends for a long time," Trump said at a signing ceremony at the White House, where he was flanked by Azerbaijani President Ilham Aliyev and Armenian Prime Minister Nikol Pashinyan. Armenia and Azerbaijan have been at odds since the late 1980s when Nagorno-Karabakh, a mountainous Azerbaijani region mostly populated by ethnic Armenians, broke away from Azerbaijan with support from Armenia. Azerbaijan took back full control of the region in 2023, prompting almost all of the territory's 100,000 ethnic Armenians to flee to Armenia. Trump said the two countries had committed to stop fighting, open up diplomatic relations and respect each other's territorial integrity. The agreement includes exclusive US development rights to a strategic transit corridor through the South Caucasus that the White House said would facilitate greater exports of energy and other resources. Trump said the United States signed separate deals with each country to expand cooperation on energy, trade and technology, including artificial intelligence. Details were not released. He said restrictions had also been lifted on defense cooperation between Azerbaijan and the United States, a development that could also worry Moscow. Both leaders praised Trump for helping to end the conflict and said they would nominate him for the Nobel Peace Prize. Trump has tried to present himself as a global peacemaker in the first months of his second term. The White House credits him with brokering a ceasefire between Cambodia and Thailand and sealing peace deals between Rwanda and the Democratic Republic of the Congo, and Pakistan and India. However, he has not managed to end Russia's 3-1/2-year-old war in Ukraine or Israel's conflict with Hamas in Gaza. Trump on Friday said he would meet Russian President Vladimir Putin in Alaska on August 15 to work on ending the war. Ending sanctions evasion blind spot US officials said the agreement was hammered out during repeated visits to the region and would provide a basis for working toward a full normalization between the countries. The peace deal could transform the South Caucasus, an energy-producing region neighboring Russia, Europe, Turkey and Iran that is criss-crossed by oil and gas pipelines but riven by closed borders and longstanding ethnic conflicts. Brett Erickson, a sanctions expert and adviser to Loyola University's Chicago School of Law, said the agreement would help the West crack down on Russian efforts to evade sanctions. 'The Caucasus has been a blind spot in sanctions policy," he said. "A formal peace creates a platform for the West to engage Armenia and Azerbaijan ... to shut down the evasion pipelines.' Tina Dolbaia, an associate fellow at the Center for Strategic and International Studies, said Friday's signing was a big symbolic move, but many questions remained, including which US companies might control the new transit corridor and how involved Armenia and Azerbaijan would be in its construction. She said Russia would likely be irritated by being excluded from the agreement and the US role in the corridor. "Now the fact that ... Armenians are shaking hands with Azerbaijanis, and they are talking about US involvement in this corridor - this is huge for Russia," she said. Olesya Vartanyan, an independent regional expert, said the deal added greater predictability to the region, but its long-term prospects would depend on continued US engagement. "Armenia and Azerbaijan ... have a much longer track record of failed negotiations and violent escalations than of peaceful resolutions," she said. "Without proper and continued US involvement, the issue will likely get deadlocked again, increasing the chances of renewed tensions." Senior administration officials said the agreement marked the end to the first of several frozen conflicts on Russia's periphery since the end of the Cold War, sending a powerful signal to the entire region. Armenia plans to award the US exclusive special development rights for an extended period on the transit corridor, US officials told Reuters this week. The so-called Trump Route for International Peace and Prosperity has already drawn interest from nine companies, including three US firms, one official said on condition of anonymity. Daphne Panayotatos, with the Washington-based rights group Freedom Now, said it had urged the Trump administration to use the meeting with Aliyev to demand the release of some 375 political prisoners held in the country. Azerbaijan, an oil-producing country that hosted the United Nations climate summit last November, has rejected Western criticism of its human rights record, describing it as unacceptable interference.
