Defence stocks saw a sharp rebound on Wednesday as investors eye Foreign Direct Investment (FDI) policy boost in the defence sector.
The defence industry in India is at the "cusp of a massive expansion", Defence Secretary Rajesh Kumar Singh said at an event on February 17. Relaxation in the FDI policies and industrial licensing procedures are other elements that will propel the growth in the Indian domestic defence industry, he added.
He further suggested that public-private-partnership would be "critical" in making the country a hub for advanced manufacturing in the sector. Citing the defence budget figures, Singh said, it was Rs 6.21 lakh crore that will go up by 9.5 per cent to 6.81 lakh crore in 2025-26.
The stocks in the defence segment rose on prospects of higher foreign investment in the domestic defence companies as investors stepped in to buy the dip following a significant correction in the defence segment over last few months.
Mazagon Dock Shipbuilders Ltd surged 11 percent to hit an intraday high of Rs 2,177.50 on the NSE, recovering after three straight sessions of losses. Bharat Dynamics Ltd (BDL) also witnessed strong buying interest, rising 9.25 percent to Rs 1,103.30 per share.
Hindustan Aeronautics Ltd (HAL) gained 2.61 percent to Rs 3,431.90 per share, while Paras Defence and Space Technologies advanced 7.43 percent to Rs 908 per share. Cochin Shipyard shares rose 9.3 percent to Rs 1,349.9 per share intraday.
Zen Technologies, which had lost 31 percent in the last two trading sessions, rebounded 10 percent to Rs 1,069.20 on the NSE. The stock had fallen sharply after the company reported a sequential decline in revenue and profitability in its third-quarter results for the period ending December.
In December, Elara Securities had upgraded multiple defence stocks, including HAL, BDL, Bharat Electronics, and Garden Reach Shipbuilders, on expectations of stronger order flows.
The defence sector has seen robust investor interest in recent years, supported by the government's push for self-reliance under the Atmanirbhar Bharat initiative. Stocks in the segment had delivered multibagger returns, rising up to 400 percent, driven by import restrictions, increased foreign direct investment (FDI), and a growing focus on defence exports. However, recent profit-booking had led to a sharp correction in valuations.
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