Mazagon Dock, other defence shares rise up to 6% in weak market: Here are three reasons

Mazagon Dock, other defence shares rise up to 6% in weak market: Here are three reasons

• Defence stocks rose up to 6% despite weak Sensex and Nifty on January 9
• US defence budget proposal and India-Germany submarine deal boosted sector gains
• Mazagon Dock led gains after news of a possible $8 billion submarine deal

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Despite overall weakness in benchmark indices, Sensex and Nifty, defence shares climbed up to 6% on January 9 due to various reasons. MTar Tech, Mazagon Dock, BEL led the gains on the Nifty India Defence index by rising 6.3%, 2.5% and 1%, respectively.

At 12:10 pm on January 9, the sectoral index was trading 0.7% higher.

Meanwhile, shares of Bharat Electronics hit seven-week high on Rs 596-crore order win.

Bharat Electronics (BEL) rises as much as 2.1% to a seven-week high at Rs 424.55 apiece.

State-owned aerospace and defence electronics company wins orders, including drone detection and jamming system, mobile communication terminal, software solution, upgrades, spares, services. The stock rose 36% in 2025.

Here are various reasons for the buying being seen in defence stocks.

1) Trump raises defence budget

A rub-off effect was seen in Indian stocks after their US peers rose after US President Donald Trump proposed a defence budget of $1.5 trillion for 2027, a substantial increase from the budget of $901 billion approved by Congress for 2026. Shares of Northrop Grumman gained over 2% and those of Lockheed Martin rose over 4%. Shares of Kratos Defense & Security Solutions jumped nearly 14% and those of RTX Corp rose nearly 1%.

2) Likely mega submarine deal

Germany and India are hammering out the details of a submarine manufacturing deal worth at least $8 billion — the largest-ever defense agreement for New Delhi, according to officials with direct knowledge of the details, Bloomberg reported on January 8.

The agreement, negotiated ahead of Chancellor Friedrich Merz’s visit to India next week, would for the first time include technology transfer for submarine production, the people said.

Mazagon Dock Shipbuilders was the top gainer among the Nifty 200 and Nifty 500 constituents by rising up to 5%. The stock rose after the news report said that the company and German-based Thyssenkrupp Marine Systems GmbH are likely to sign a submarine manufacturing deal this year.

India’s navy operates about a dozen aging Russian submarines and six new French-made models. If the deal under discussion goes ahead, India would scrap plans to buy three more French subs, the people said.

3) Jitters over Greenland

European defence stocks posted gains for the fifth consecutive session on January 8 as the US president and his team were looking into a "range of options" to acquire Greenland, White House Press Secretary Karoline Leavitt said on Tuesday.

The US president has emphasised the need to occupy Greenland, saying the US needs it for national security, while pointing to the Russian and Chinese activities in the region.

In response, Greenland as well as Denmark, of which the autonomous territory is a part, have continuously said that the region is not up for grabs.

European leaders issued a statement on Tuesday saying, "Greenland belongs to its people. It is for Denmark and Greenland, and them only, to decide on matters concerning Denmark and Greenland," CNBC reported.

There are concerns that any move by Trump could be detrimental for the very existence of NATO, which could pose huge geopolitical concern.