The share price of defence stocks are running up in trade today. Though a sentimental move, the rising tension between India-Pakistan and the late night offensive by Pakistan yesterday surely added fillip to the share price . Bharat Dynamics is up 5% in intra-day trade while BEL, HAL are all up over 2%. Even ship-builder stocks like Mazagaon Dock, Garden Reach are up around 1%.
Harshit Kapadia, Vice President & Defence sector expert, Elara Securities highlighted that “Rising tension between India and Pakistan and the counter attacks by India following Pakistan’s offensive on Indian cities last night is a key factor. There is anticipation of order momentum for products like explosives, arms & ammunition, bullet proof jackets, drones and counter drone systems rising. But some of the items may be imported.”
The key factors that’s driving up prices of the defence stocks include –
Rising tension between India-Pakistan
The Indian armed forces have successfully thwarted Pakistan’s attempts to attack several cities across north India last night . This is after drone and missile activity were reported across Jammu, Rajasthan, Gujarat, Punjab. As a result there was blackout in many regions as a precautionary measure. Airports across the country have also been put on high alert. All these have raised expectation of greater demand for armed equipment.
BDL planning overseas office
Another key reason why Bharat Dynamics is rallying is because the company is planning to expand its overseas presence as well. The leading ammunition and missile manufacturer is also keen about setting up office outside India. The order pipeline of the company for the next 2-3 years Orders in pipeline exceeds Rs 20,000 crore.