Defence shares rise for 5th day ahead of DAC meeting today; Paras Defence, Mazagon Dock lead gains

Defence shares rise for 5th day amid geopolitical tensions; Paras Defence, Mazagon Dock lead gains

Defence shares rose for fifth consecutive session on December 26 amid geopolitical tensions flaring up in different parts of the world and year-end Defence Acquisition Council meeting today.

Defence major Bharat Electronics traded over 1% higher, and was the best performing Nifty 50 stock. Outside the Nifty 50, shares of Paras Defence and Space Technologies, Mtar Technologies, and Mazagon Dock Shipbuilders were up 2–3% and the Nifty India Defence index was up 1%, higher than any other sectoral index.

A report said that defence deals worth Rs 80,000 crore are likely to be approved by Rajnath Singh-led DAC on December 26.

Several defence deals may be cleared to strengthen air defence and ISR capabilities, reported ET NOW.

Procurement of Embraer-based Airborne Early Warning System, NETRA AEW integration are on agenda, the report added.

The rise in defence shares today also comes on the back of US ordering increased economic pressure on Venezuelan oil shipments and carrying out airstrikes against Islamic State militants in northwest Nigeria at the request of Nigeria's government.

Both Venezuela and Nigeria are major oil producers. While Nigeria's oilfields are mainly located in the south of the country, the airstrikes added to geopolitical risks.

The White House has ordered US military forces to focus on a "quarantine" of Venezuelan oil for at least the next two months, indicating Washington is currently more interested in using economic rather than military means to pressure Caracas.

There are also expectations in the upcoming FY27 Budget that defence budget could rise up to 20%.

India is expected to push for a significantly higher defence allocation in the next fiscal, Defence Secretary Rajesh Kumar Singh said last month. Speaking at the 98th Annual General Meeting of the Federation of Indian Chambers of Commerce & Industry (FICCI), he noted that the country has traditionally received a “10% higher defence allocation every year.”

“We are in a particularly tough neighbourhood,” Singh said. “Will be asking closer to 20% higher allocation in coming budget.”

At 10:30 am on December 26, Nifty India Defence index was trading 1% higher at 7,870, thus extending its five-session gains to 6.5%.

The index is still 14% lower than its all-time high.