Defence stocks made significant gains on June 3, pushing the Nifty India Defence index up into the green for the second consecutive day. This comes on the back of escalating geopolitical tensions across the globe.
The defence index was up 1.6 percent to hover around 8,833 in the morning, dodging the downturn in the overall market. Benchmark indices Sensex and Nifty were down nearly 0.4 percent each in the red.
Cochin Shipyard shares were the top gainer on the index, jumping over 5 percent to trade at Rs 2,019 apiece. Garden Reach Shipbuilders and Engineers (GRSE) and BEML shares followed, rising around 4 percent each. Astra Microwave Products, Solar Industries India, Mishra Dhatu Nigam (Midhani), DCX India and Mazagon Dock Shipbuilders shares were up over 2 percent each.
Paras Defence and Zen Technologies were up over 1.7 percent each, while Bharat Dynamics (BDL), Bharat Electronics (BEL) and Data Patterns shares were trading in the green with marginal gains.
Bucking the trend, Hindustan Aeronautics (HAL) shares were hovering in the red with marginal losses.
The war between Russia and Ukraine has seen severe escalations recently, after a brief period of calm over hopes of a possible deal. Russia on May 31 launched 472 drones and seven missiles at Ukraine, marking the largest drone assault since the war's inception. Ukraine's air defenses allegedly intercepted 385 drones.
Ukraine retaliated by conducting major strikes on Russia's military airbases on June 1, just a day before the countries were scheduled to hold peace talks in Istanbul. According to Ukrainian officials, the surprise drone attack destroyed over 40 warplanes at air bases deep inside Russia. Ukrainian President Volodymyr Zelenskyy called it a "brilliant operation" that would go down in history.
In response to journalists questions, I emphasised that yesterday, Ukraine carried out a brilliant operation, planned and executed independently by our side. Ukraine is making it clear: we are not going to surrender, and we will not accept any ultimatums. But we do not want war.
Volodymyr Zelenskyy / (@ZelenskyyUa) June 2, 2025
While the two countries have engaged in discussions, the recent escalations have raised concerns over the possibility of further aggressive warfare in the near future.
Additionally, UN nuclear watchdog recently alleged that Iran has stepped up its production of enriched uranium, a key component of making nuclear weapons. International Atomic Energy Agency (IAEA) report revealed that Iran possesses over 400 kg of uranium enriched to 60% purity, nearing the 90% threshold for weapons-grade material, according to BBC.
This led to tensions between Iran and US. US President Donald Trump-led country has sent a proposal to Iran for a nuclear deal between the two countries after multiple rounds of talks. “The US proposal will be appropriately responded to in line with the principles, national interests and rights of the people of Iran”, Iranian Foreign Minister Seyed Abbas Araghchi wrote on X.
Media is speculating about an imminent Iran-U.S. deal. Not sure if we are there yet. Iran is sincere about a diplomatic solution that will serve the interests of all sides. But getting there requires an agreement that will fully terminate all sanctions and uphold Iran's nuclear pic.twitter.com/56u9elxLIj Seyed Abbas Araghchi (@araghchi) May 29, 2025
The rise in the geopolitical tensions are likely to have boosted the defence stocks on hopes of more demand.
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