In a remarkable surge following heightened geopolitical activity, Indian defence stocks witnessed a sharp rally today, with several key players posting double-digit intraday gains. The bullish sentiment in the market was sparked by the Indian Armed Forces’ recent cross-border offensive, code-named Operation Sindoor, launched in response to escalated tensions with Pakistan.
Defence Index Soars as Investor Optimism Peaks
The Nifty India Defence Index jumped by 6% intraday, reflecting growing investor confidence in the sector. Cochin Shipyard, Garden Reach Shipbuilders & Engineers (GRSE), and Mazagon Dock Shipbuilders saw significant price spikes all clocking around 12% gains by the day’s close. Notably, Paras Defence and Space Technologies hit the upper circuit with a 20% gain, underscoring investor bullishness on defence electronics and manufacturing capabilities.
PSU Stocks Take the Lead
Public sector undertakings (PSUs) led the rally, buoyed by expectations of increased defence allocations and domestic production orders. GRSE was trading at ₹2,517, up 12%, while Cochin Shipyard also touched the ₹2,517 mark with a similar gain. Mazagon Dock rose nearly 10%, fueled by expectations of fresh naval contracts and global export opportunities.
Five-Day Rally Reflects Structural Tailwinds
This is not a one-off rally. Over the past five days, Cochin Shipyard has gained 34%, while GRSE has delivered 38% returns. Paras Defence’s total rise over the period is 20%, riding on the back of strong Q4 earnings and market momentum. The sustained uptrend is largely attributed to domestic demand, export orders, and a sharp policy push under India’s “Make in India” defence strategy.
FY25 Performance Highlights Strong Growth
- GRSE reported a 48% YoY increase in net profit for FY25, reaching ₹527 crore.
- Its Q4 profit jumped 118% YoY to ₹244 crore.
- Over the past year, GRSE shares have delivered a staggering 125% return to investors.
Strategic Orders Drive Sentiment
Defence Acquisition Council (DAC) recently approved contracts worth ₹54,000 crore, including orders for T-90 tank engines and the Varunastra torpedo system. This decision follows the government’s larger vision to meet ₹8.45 lakh crore in defence procurement by FY27, giving long-term visibility to investors and contractors alike.
Adding to this is India’s export ambition: defence exports in FY25 touched ₹23,622 crore, marking a 34x rise over the past decade. The Ministry of Defence aims to hit ₹3 lakh crore in production and exports by 2029, with FY25 orders to domestic firms already amounting to ₹1.69 lakh crore.
Policy Backdrop and Market Expectations
Brokerages and analysts highlight three driving factors for this bullish trend:
- Geopolitical urgency, following Operation Sindoor, has created near-term demand.
- Policy continuity supporting indigenization, with 65% of India’s defence equipment now locally produced.
- Structural incentives, including tax and export reforms, are fostering confidence in India’s defence manufacturing ecosystem.
According to Antik Stock Broking, “Indian shipyards and electronics firms are entering a multi-year earnings upgrade cycle, thanks to consistent order visibility and robust government support. Defence PSUs are now being re-rated for long-term growth.”
Market Reflecting Confidence
As India’s strategic and security posture intensifies in the region, the markets have begun to reflect confidence in defence manufacturing as a cornerstone of the economy. With export targets, indigenous production incentives, and global demand aligned, defence counters may remain in investor focus for the foreseeable future, especially if geopolitical risks continue to shape national policy and procurement.
Also Read: India Tightens Economic Screws Of Pakistan: ‘Operation Sindoor 2.0’
