Defence stocks recorded strong losses in morning trade on February 3 after the modest rise in defence spending that was announced in Budget 2025-26. The Budget, which was presented by Finance Minister Nirmala Sitharaman on February 1, allocated Rs 6.81 lakh crore for the Ministry of Defence, up 9.53 percent from the current financial year.
The Nifty Defence index dropped over 5 percent or 317 points to trade at 5,881.40 to emerge as the worst performing index among the thematic indices on NSE.
Shares of Bharat Dynamics were the top loser on the Nifty Defence index, tumbling nearly 9 percent to trade at Rs 1,142 apiece. Shares of Paras Defence dropped nearly 7 percent to trade at Rs 985.95 apiece. Stocks of Hindustan Aeronautics (HAL) and Mazagon Dock Shipbuilders Limited fell 5 percent each to trade at Rs 3,566 and Rs 2,263 per share, respectively.
Zen Technologies shares tumbled over 7 percent to Rs 1,667.50, while those of BEML fell nearly 5 percent to trade at Rs 3,493.15. Shares of Garden Reach Shipbuilders & Engineers (GRSE) were down 7 percent while Cochin Shipyard shares were down 5 percent.
Experts noted that the capital expenditure increased modestly by 4.6 percent to Rs 1.8 lakh crore from the previous budget. Additionally, the government announced that the ministry returned Rs 12,500 crore allocated as part of the capital outlay under the interim budget of July 2024 to the Ministry of Finance.
Further, the pension bill under the revenue head of Rs 1.6 lakh crore alone constitutes roughly 23.49 percent of the 2025-26 defence budget. Experts say that the pension bill should be a source of worry and attention, because it mandates the government to try to reduce it by implementing the human resources reforms intended to stem the growth of pension allocations and partially liberate resources for capital acquisitions.
After the Budget was presented in the Parliament on February 1, the defence stocks had recorded strong losses. The Nifty India Defence index had plunged nearly 250 points during the day to close at 6,197.95.
The fall in defence stocks on February 3 comes amid an overall low market sentiment, with Sensex being down nearly 600 points to hover around 76,940.
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