The defence sector stocks like HAL, Bharat Dynamics, BEL, Garden Reach Shipyard, Mazagaon Dock Shipbuilders, Paras Defence are up as much as 12% in intra-day trade. The share price of HAL and other defence stocks have been rallying for the second straight session. The growing tension between India-Pakistan is no doubt one of the key reasons. But that apart India signing the key Rs 63,00 crore deal with France for 26 Rafale Marine Aircraft is also seen as a key trigger, especially the Navy.
Harshit Kapadia, Vice President & Defence sector expert, Elara Securities pointed out that, “Defence stocks are clocking smart gains for 2nd straight session due to rise in tension between India-Pakistan. There could be rise in order momentum for products like explosives, arms and ammunition, bullet proof jackets, drones and counter drone systems. But some of the items may be imported.”
Three Reasons why defence stocks are rallying today
The key factors why defence stocks are in focus include-
Growing tension between India and Pakistan
The tension between India-Pakistan is growing and this has created significant apprehension in the market and interest for the defence stocks. As per recent reports that are emerging, after the developments with regards to the Indus Waters Treaty, the country might also be considering curbs on the export, especially of electronics and e-commerce. There are also reports suggesting India considering shutting the air cargo corridor to Pakistan. Pakistan meanwhile has shut the air space and passage of India flights via Pakistan.
Strong order book
The defence sector stocks are all in focus after the string slew of order wins. Hindustan Aeronautics bagged orders worth Rs 62,700 crore orders for Light combat helicopter supply to the Army and airforce. That apart, even Bharat Dynamics (BDL) bagged orders worth Rs 22,700 crore as of April 1, 2025. The order book for Bharat Electronics is buzzing as well. It has secured a total of Rs 2803 crore in current fiscal year and in FY25, the company bagged a healthy orderbook. In fact, overall for the sector the shares have recorded strong rebound in inflows after a weak start.
Positive outlook for Defence sector in FY26
The other key factor why defence stocks are rallying is the outlook going forward. According to most sector analysts, rising capex is a key reason why investor interest is growing in the sector. According to Kapadia, “The FY26 outlook is positive as defence capex is rising, Atmanirbharta in Defence sector is picking up pace. This coupled with the Europe re-armament may see rise in components sourcing and add to the growing business prospects. This apart geo-political tension may also keep the focus on the sector intact.”