Rally in defence stocks: Strong order books, sentiment-driven buying fuels surge

India Defence Stocks: The index has risen by around 2,000 points, or nearly 39 per cent, to 7128.8 as on April 30, 2025. The 18 constituents of the index have also seen an impressive rally.

Nifty, Sensex Defence Stocks: An improvement in order books, correction in prices, and sentiment-driven buying have triggered a significant rally in the defence stocks over the last two months. The Nifty India Defence Index, which tracks the performance of portfolio of stocks that broadly represent the defence theme, has rallied nearly 40 per cent since March 1, 2025.

The index has risen by around 2,000 points, or nearly 39 per cent, to 7128.8 as on April 30, 2025. The 18 constituents of the index have also seen an impressive rally. In the last two months, Hindustan Aeronautics Ltd surged 45 per cent, Mazagon Dock Shipbuilders Ltd gained 41 per cent, Astra Microwave Products Limited rose 35 per cent, Bharat Electronic Ltd climbed 27 per cent and Cochin Shipyard rose 24 per cent.

“The recent rally in the defence stocks is driven by new orders which some companies such as HAL and Bharat Electronics Ltd are receiving,” said Anil R, Senior Research analyst, Geojit Investments Ltd.

On April 29, the Nifty India Defence index rallied 4.2 per cent to touch an all-time high of 8,418.05 after Pakistan’s Defence Minister Khawaja Asif said a military attack by India is imminent in the wake of terror attack on tourists in Pahalgam. “In the last few days, defence stocks have started rising due to the ongoing tension between India and Pakistan. It is purely a sentiment-driven pickup,” said an analyst.

Order Book Inflows

In March, Hindustan Aeronautics Ltd signed two contracts with the Ministry of Defence for the supply of 156 Light Combat Helicopters (LCH), Prachand to the Indian Army (90 nos) and Indian Air Force (66 nos) along with training and other associated equipment worth around Rs 62,700 crore.

In April, Bharat Electronics Ltd (BEL) signed a contract with the Ministry of Defence worth around Rs 2,210 crores for supply of Electronic Warfare (EW) Suite for Mi 17 V5 Helicopters of the Indian Air Force.

The government’s focus on self-reliance in defence manufacturing by procuring new products from domestic sources is also leading to a positive sentiment for the sector, analysts said. In March, the Defence Acquisition Council (DAC) approved a defence procurement proposal worth Rs 54,000 crore.

The Nifty India Defence index peaked in July 2024 driven by higher order books. It touched a high of 8,302.03 on July 11, 2024 but subsequently saw a sharp correction of around 38 per cent between July 11, 2024 and February 28, 2025.

The corrections in stock prices of some of the companies is generating investors’ interest in these companies, analysts said. After touching a peak in July, Cochin Shipyard and HAL stocks have corrected by 55 per cent and 45 per cent, respectively.

Bullish Outlook

Analysts remain upbeat on the outlook for the defence sector.

“The biggest change is that the order books (for defence companies) have improved. We are also getting export orders. These are the factors driving stock prices of defence companies,” Geojit Investment’s Anil said.

Last month, India delivered the BrahMos supersonic cruise missiles to the Philippines as part of a $375-million deal signed in 2022.

Nifty, Sensex Defence Stocks: An improvement in order books, correction in prices, and sentiment-driven buying have triggered a significant rally in the defence stocks over the last two months. The Nifty India Defence Index, which tracks the performance of portfolio of stocks that broadly represent the defence theme, has rallied nearly 40 per cent since March 1, 2025.

The index has risen by around 2,000 points, or nearly 39 per cent, to 7128.8 as on April 30, 2025. The 18 constituents of the index have also seen an impressive rally. In the last two months, Hindustan Aeronautics Ltd surged 45 per cent, Mazagon Dock Shipbuilders Ltd gained 41 per cent, Astra Microwave Products Limited rose 35 per cent, Bharat Electronic Ltd climbed 27 per cent and Cochin Shipyard rose 24 per cent.

“The recent rally in the defence stocks is driven by new orders which some companies such as HAL and Bharat Electronics Ltd are receiving,” said Anil R, Senior Research analyst, Geojit Investments Ltd.

On April 29, the Nifty India Defence index rallied 4.2 per cent to touch an all-time high of 8,418.05 after Pakistan’s Defence Minister Khawaja Asif said a military attack by India is imminent in the wake of terror attack on tourists in Pahalgam. “In the last few days, defence stocks have started rising due to the ongoing tension between India and Pakistan. It is purely a sentiment-driven pickup,” said an analyst.

Order Book Inflows

In March, Hindustan Aeronautics Ltd signed two contracts with the Ministry of Defence for the supply of 156 Light Combat Helicopters (LCH), Prachand to the Indian Army (90 nos) and Indian Air Force (66 nos) along with training and other associated equipment worth around Rs 62,700 crore.

In April, Bharat Electronics Ltd (BEL) signed a contract with the Ministry of Defence worth around Rs 2,210 crores for supply of Electronic Warfare (EW) Suite for Mi 17 V5 Helicopters of the Indian Air Force.

The government’s focus on self-reliance in defence manufacturing by procuring new products from domestic sources is also leading to a positive sentiment for the sector, analysts said. In March, the Defence Acquisition Council (DAC) approved a defence procurement proposal worth Rs 54,000 crore.

The Nifty India Defence index peaked in July 2024 driven by higher order books. It touched a high of 8,302.03 on July 11, 2024 but subsequently saw a sharp correction of around 38 per cent between July 11, 2024 and February 28, 2025.

The corrections in stock prices of some of the companies is generating investors’ interest in these companies, analysts said. After touching a peak in July, Cochin Shipyard and HAL stocks have corrected by 55 per cent and 45 per cent, respectively.

Bullish Outlook

Analysts remain upbeat on the outlook for the defence sector.

“The biggest change is that the order books (for defence companies) have improved. We are also getting export orders. These are the factors driving stock prices of defence companies,” Geojit Investment’s Anil said.

Last month, India delivered the BrahMos supersonic cruise missiles to the Philippines as part of a $375-million deal signed in 2022.