Defence Stocks Surge for Third Day Amid Geopolitical Tensions

Market Performance

Defense stocks continued their upward trend on June 4, with the Nifty India Defence index gaining over 1%, marking its third consecutive day of gains. Despite muted broader market sentiment, key players such as Garden Reach Shipbuilders & Engineers (GRSE), Cochin Shipyard, and Zen Technologies experienced significant rallies.

• GRSE surged 7%, hitting a record high after signing an MoU with Norway's Kongsberg for India's first polar research vessel.
• Cochin Shipyard rose 5%, while Zen Technologies and Paras Defence gained over 2% each.
• Mishra Dhatu Nigam (Midhani), BEML, and Mazagon Dock Shipbuilders climbed 1.4-1.8%.
• Bharat Dynamics (BDL) and Astra Microwave also traded in the green.

However, Bharat Electronics (BEL), Data Patterns, and Hindustan Aeronautics (HAL) saw minor declines due to supply chain concerns.

Why Are Defence Stocks Rising?

1. Strong Order Book Visibility

Geopolitical tensions have boosted demand for defense equipment, increasing order visibility for Indian manufacturers.

2. Policy Support & Budget Growth

• Defence Acquisition Procedure 2020 and Positive Indigenisation Lists promote local manufacturing.
• India's defense budget has doubled in the last decade, with further increases expected.

3. Geopolitical Tensions Fuel Demand

• Operation Sindoor: Recent military strikes heightened defense spending expectations.
• Russia-Ukraine War: Escalating attacks have renewed focus on military preparedness.
• Iran's Uranium Enrichment: Rising Nuclear Tensions Could Push Global Defense Investments Higher.

Key Defence Stocks in Focus

Summary

Defence stocks are rallying due to the following:

 Geopolitical tensions driving higher military spending

 Government policies supporting domestic manufacturing

 Strong order books ensuring revenue growth

While some stocks face short-term volatility, the sector's long-term outlook remains strong. Investors are closely watching further developments in global conflicts and India's defense budget allocations.

Stay tuned for more updates on defense stocks!