Paras Defence, BEL, other defence stocks extend gains for 2nd day, surge up to 14% ahead of Cabinet meet tomorrow

Paras Defence, BEL, other defence stocks extend gains for 2nd day.

Shares of defence-related companies rallied for the second straight session on Tuesday, with several stocks surging over 15 percent, as heightened tensions along the India-Pakistan border and anticipation around Wednesday's Union Cabinet meeting kept investor interest strong in the sector.

The Nifty Defence index rose as much as 5.5 percent during the day, with all its 18 constituents trading in the green. In the last two days, it is up nearly 10 percent. Market participants cited continued ceasefire violations by Pakistan and escalating security concerns in Jammu & Kashmir as key triggers for the rally.

Paras Defence and Space Technologies led the gains, soaring 15.13 percent to hit an intraday high of Rs 1,316.80 on the NSE. The stock has climbed nearly 25 percent over the last two sessions. Garden Reach Shipbuilders & Engineers also jumped 15.45 percent during the day before trimming some gains to trade 12.21 percent higher at Rs 1,963.20.

Data Patterns (India) rose 12.2 percent, while Cochin Shipyard advanced 8.85 percent. Hindustan Aeronautics Ltd and Mazagon Dock Shipbuilders posted gains in the range of 3 to 7 percent.

Meanwhile, Bharat Electronics Ltd (BEL) emerged as the top performer in the Nifty 50 pack, rising 4.72 percent to an intraday high of Rs 319.45. The stock has gained nearly 7 percent in the past two days.

The fresh buying in defence stocks comes amid heightened geopolitical tensions following the April 22 terror attack in Pahalgam, which claimed the lives of 26 people.

The government is expected to discuss security and strategic issues at length when the Union Cabinet meets on Wednesday at 11 am under the chairmanship of Prime Minister Narendra Modi. This will be the first full Cabinet meeting since the attack; only the Cabinet Committee on Security had convened on April 23.

Adding to the concerns, Pakistan's Defence Minister Khawaja Asif told Reuters that a “military incursion” by India was expected in the aftermath of the Pahalgam terror attack. Meanwhile, Indian army firmly responded to ceasefire violations along the Line of Control (LoC) for the fifth consecutive night on Monday.

Security measures were further tightened in the Valley, with authorities ordering the closure of nearly 50 public parks and gardens in Kashmir.

Vikas Gupta, smallcase Manager and Founder at OmniScience Capital, noted that in case of a war, even if limited to 2-4 weeks, the demand for defence equipment, including arms, ammunition and weapons, could be substantial and result in significant orders to defence companies.

Analysts said increased government focus on defence preparedness, alongside expectations of faster approvals for defence procurement and indigenisation, is likely to benefit domestic players.

India and France also inked Rs 63,000-crore deal for advanced Rafale-M jets on April 28.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.