BEL, Mazagon Dock, HAL, other defence shares rise up to 10%: Middle East tensions, two other reasons

BEL, Mazagon Dock, HAL, other defence shares rise in trade.

• Defence stocks rose up to 5 percent as markets rebounded.
• Bharat Electronics led gains, rising 3.6 percent in Nifty pack.
• Mazagon Dock rose on news of a major Indian Navy submarine deal.

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Shares of defence companies such as Bharat Electronics, Mazagon Dock Shipbuilders and Hindustan Aeronautics rose up to 10 percent in trade on Thursday as the broader market recovered after three sessions of losses and global equities advanced following recent declines linked to tensions in West Asia.

Bharat Electronics emerged as the top gainer in the Nifty Defence pack, rising up to 3.6 percent. Shares of Mazagon Dock Shipbuilders and Hindustan Aeronautics also traded higher, gaining up to 5.3 percent and 0.5 percent, respectively.

Out of 18 defence-related stocks tracked, 16 were trading in the green in the Nifty Defence Index, while only two — Cyient DLM and Dynamatic Technologies — were in the red.

Key triggers

1) Middle East tensions: Escalating tensions involving Iran, Israel and the United States have renewed interest in defence companies. Heightened geopolitical uncertainty generally increases focus on defence preparedness across countries, which can drive demand for equipment such as missiles, surveillance systems, drones, ammunition and radar systems. This often leads to buying in defence-linked stocks on expectations of higher orders and improved business prospects.

2) Value buying: Traders also pointed to value buying in the sector after stocks declined about 1 percent in the previous session.

3) Buying in ship building shares: Shares of Mazagon Dock Shipbuilders extended gains and were up nearly 10 percent. Reports indicated that the Indian Navy is likely to finalise a deal worth about Rs 99,000 crore for six German submarines from Thyssenkrupp Marine Systems, which are expected to be constructed in Mumbai by Mazagon Dock.

Shares of Cochin Shipyard also rose more than 2 percent on the back of the development.

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