The shares of defence companies recorded strong gains on August 11. The sharp rise in the share prices pushed the Nifty Defence index up nearly 1.3 percent, snapping a three-session losing streak.
Paras Defence and Astra Microwave Products shares were the top gainer on the index by jumping 4.5 percent each to trade at Rs 651 and Rs 999 apiece, while Data Patterns shares gained around 4 percent. Solar Industries and Mazagon Dock Shipbuilders were up nearly 3 percent, while GRSE and Zen Tech gained nearly 2 percent. Heavyweights Bharat Dynamics (BDL) and Hindustan Aeronautics (HAL) were up around 1 percent each.
Here are the likely triggers for the sharp rise in the share prices:
India's annual defence production hits all time high in FY25:
Union Defence Minister Rajnath Singh took to X platform on August 9 (Saturday) to announce that India’s annual defence production soared to an all-time high of Rs 1.51 lakh crore in FY25. This marks a strong growth of 18 percent from the Rs 1.27 lakh crore annual output reported for FY24. The defence production rose a whopping 90 percent on-year from the Rs 79,071 crore output reported for FY20.
"I commend the collective efforts of the Department of DefenceProduction and all stakeholders i.e., DPSUs, public sector manufacturers, and the private industry in achieving this landmark. This upward trajectory is a clear indicator of India's strengthening defence industrial base," the defence minister wrote in a post on X.
DRDO chief praises Indian defence equipment’s success during Operation Sindoor:
Defence Research and Development Organisation (DRDO) Chairman Samir Kamat on August 9 (Saturday) said BrahMos missiles and the Akashteer defence systems played key roles in 'Operation Sindoor'. "Operation Sindoor was more than a mission. It was a declaration of India’s ability to stand tall through self-reliance, strategic foresight, and indigenous technological strength. It was a statement to the world that India has the capability to protect its borders through homegrown technology," he said while speaking at 14th convocation ceremony of Defence Institute of Advanced Technology (DIAT) in Pune.
Kamat explained how BrahMos missile was used as the primary offensive weapon, while anti-drone Akashteer was used for defence.
Bharat Dynamics Limited (BDL) manufactures the BrahMos missile.
Pakistan's threat to ‘blow up’ Indian dam:
Pakistan’s Army Chief Asim Munir has vowed to destroy any dam or water infrastructure India might build on the Indus water channels, following New Delhi’s decision to place the Indus Waters Treaty into abeyance after the April Pahalgam terror attack.
Speaking at an event in US, Munir said, "We will wait for India to build a dam, and when it does so, phir das missile sey faarigh kar dengey (we will destroy it with 10 missiles) … The Indus River is not the Indians’ family property. Humein missilon ki kami nahin hai (we have no shortage of missiles)," Munir reportedly said, while claiming that India’s move could put 250 million Pakistanis at risk of starvation.
The latest threat from the Pakistani army chief has reignited possibility of escalations in geopolitical tensions, which may in turn boost the defence stocks.
Defence shares earlier came in focus after the Indian military in May conducted targeted strikes against terrorist outfits in Pakistan and Pakistan occupied Kashmir under the codename 'Operation Sindoor'. As the geopolitical tensions between India and Pakistan eased, the escalating wars between Russia-Ukraine and Israel- Iran further boosted the stocks. However, investors resorted to profit booking recently as geopolitical tensions eased around the globe.
Earnings:
The sharp rise in share prices also comes as strong earnings by some of the notable players boosted investor sentiment.
BEML on August 11 reported a net loss of Rs 64 crore for the April-June quarter of FY26. This marks a notable decline from the Rs 70.5 crore net loss reported for the corresponding quarter of FY25. Revenue from operations were unchanged at Rs 634 crore.
GRSE on August 8 reported a net profit of Rs 120 crore for Q1 FY26. This marks a 38 percent on-year rise from the Rs 87 crore net profit reported in Q1 FY25. However, net profit nearly halved sequentially from the Rs 244 crore reported in Q4 FY25.
BEML is set to announce its results for the April-June quarter of FY25 today.
Value buying:
Defence stocks have seen significant correction recently. After rallying a whopping 42 percent since beginning of the year to hit a record high in June, the Nifty India Defence index dropped more than 17 percent as analysts flagged stretched valuations.
However, investors may have taken a relook at the stocks after the significant correction, pushing the stocks higher on value buying.
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