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Op Sindoor effect? Defence stocks at new record, 50% spike since February low
India's listed defence companies have reached a record market capitalisation of Rs 11.23 lakh crore, driven by renewed investor appetite, geopolitical concerns, and sustained policy focus on domestic defence manufacturing read more
The value of Indian defence stocks has surged in recent weeks. AI-generated image via DALL-E
India's listed defence companies have reached a record market capitalisation of Rs 11.23 lakh crore, driven by renewed investor appetite, geopolitical concerns, and sustained policy focus on domestic defence manufacturing. The rally, captured in the continued strength of the Nifty India Defence Index, marks a sharp turnaround for the sector after a prolonged correction.
The index has climbed 9 per cent so far in May, extending gains of 11.5 per cent in April and 24.6% in March. This surge follows a 33 per cent slump between July 2024 and February 2025. Since bottoming out in February, the benchmark has staged a cumulative recovery of over 50 per cent. The current valuation is significantly higher than the previous peak of Rs 10.09 lakh crore seen in July last year and up nearly 62 per cent from the February low of Rs 6.95 lakh crore, Moneycontrol reported.
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Despite the broad gains, only six of the 18 stocks within the index have surpassed their earlier record highs. The rest remain below previous peaks, pointing to a rally concentrated in select names.
Shares of firms such as DCX Systems, MTAR Technologies, Dynamatic Technologies, Cyient DLM, Unimech Aerospace and Manufacturing, Data Patterns, Mishra Dhatu Nigam, Astra Microwave Products, Hindustan Aeronautics, and BEML have surged between 55 per cent and 112 per cent from their 52-week lows hit in March and April.
Eight other defence stocks that touched their lows earlier in 2024 have also rebounded, delivering returns ranging from 58 per cent to 200 per cent. These include Cochin Shipyard, Bharat Dynamics, Mazagon Dock Shipbuilders, Zen Technologies, Bharat Electronics, Solar Industries India, Paras Defence and Space Technologies, and Garden Reach Shipbuilders.
The rally gained momentum after tensions flared between India and Pakistan in early spring, followed by a wave of investor optimism as the market corrected and rebounded.
Prime Minister Narendra Modi's renewed focus on boosting indigenous defence production under the Make in India initiative has also strengthened sentiment. His call for advancing modern military capabilities and promoting local manufacturing has reinforced expectations that government support for the sector will continue.
Interest from more than a dozen countries in acquiring India's BrahMos missile system following its deployment during Operation Sindoor has added to investor confidence in the export potential of Indian defence technologies.
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Institutional buying has picked up as well. Mutual funds increased their exposure to 11 of the 18 listed defence firms in April. Hindustan Aeronautics saw inflows of Rs 505 crore, raising mutual fund holdings to Rs 13,480 crore. Solar Industries India attracted Rs 119 crore, taking the total to Rs 15,510 crore. Mazagon Dock Shipbuilders received Rs 78 crore in fresh investments, bringing its mutual fund holdings to Rs 1,727 crore.
Other companies that drew institutional interest include Zen Technologies, BEML, Data Patterns, Garden Reach Shipbuilders, Mishra Dhatu Nigam, and Dynamatic Technologies, with inflows ranging from Rs 2 crore to Rs 60 crore. On the other hand, Bharat Electronics recorded the largest outflow, with mutual fund holdings dropping by Rs 893 crore to Rs 33,619 crore. Smaller reductions were also seen in Cochin Shipyard, Astra Microwave Products, Unimech Aerospace, and MTAR Technologies.
Sandeep Bagla of Trust Mutual Fund said rising regional tensions are likely to drive continued increases in defence budgets, making the sector an attractive long-term investment opportunity.
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Anil Rego, chief executive at Right Horizons PMS, called defence both a structural and tactical play. He cited the government's consistent push for modernization, a growing export pipeline, and ongoing reforms under the Atmanirbhar Bharat program as key factors supporting the sector's long-term potential.
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