Shares of defence companies including Hindustan Aeronautics Ltd (HAL), Bharat Electronics, Cochin Shipyard and Mazagon Dock Shipbuilders came under selling pressure on Wednesday following profit booking, as hopes of de-escalation between India and Pakistan gained ground.
Bharat Dynamics emerged as the biggest loser, dropping 5 percent to end at Rs 1,452.8 after an initial rise of 2.25 percent. Mazagon Dock slipped over 4 percent after surging to a high of Rs 3,108 earlier in the session.
Zen Technologies also declined in line with the broader trend.
The pullback in defence counters came despite early morning gains triggered by Indian armed forces launching precision missile strikes on nine terrorist camps in Pakistan and Pakistan-occupied Kashmir. The action was seen as retaliation for the April 22 terror attack in Jammu & Kashmir’s Pahalgam, which claimed 26 civilian lives.
The market participants said the response was widely anticipated and had already been priced in. "This was a measured and specific strike targeting terror infrastructure, not a declaration of full-scale war," said Sunil Subramaniam, a market expert.
The Nifty India Defence index declined over 1 percent, with 10 of its 18 constituents trading in the red.
Analysts said that while geopolitical tensions could keep markets jittery in the near term, India’s calibrated approach may reduce the chances of retaliatory escalation from Pakistan.
Dr. Vikas Gupta, CEO and Chief Investment Strategist at OmniScience Capital, said the strikes—referred to as “Operation Sindoor”—may eventually boost earnings visibility for defence firms over the medium term. “The focus will now shift to execution. Defence companies are likely to receive aggressive targets that could reflect in their performance over the next one to three years,” he noted.
Gupta also highlighted that sectors supporting defence beyond traditional arms—such as cybersecurity, rare earth minerals, oil and gas, military logistics, and infrastructure—could see accelerated activity.
Despite the short-term correction, analysts remain constructive on the long-term outlook for defence-related stocks, citing continued policy push and strategic imperatives.
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