Business

IIE DIGITAL DESK : May 14, 2025 – Indian defence stocks witnessed a significant rally on Wednesday, with shares of Cochin Shipyard, Bharat Dynamics, and other key players surging up to 11% on the Bombay Stock Exchange (BSE). This surge follows the successful execution of Operation Sindoor and strong endorsements from Prime Minister Narendra Modi for India's defence manufacturing capabilities.

Operation Sindoor, launched in response to the April 22 Pahalgam terror attack, involved targeted strikes on terrorist camps in Pakistan and Pakistan-occupied Jammu and Kashmir (PoK). The operation showcased the effectiveness of domestically produced military equipment, reinforcing investor confidence in India's defence sector.

Prime Minister Modi's emphasis on bolstering local defence production, coupled with the successful deployment of indigenous weaponry during the operation, has further fueled market optimism. Modi also publicly countered Pakistan's claims regarding the S-400 missile system, asserting India's self-reliance and capability in defence technologies.

The rally was not limited to Cochin Shipyard and Bharat Dynamics; other defence-related stocks, including Hindustan Aeronautics and Bharat Forge, also saw significant gains. Analysts attribute this surge to increased government defence spending and modernization initiatives, which are expected to generate substantial growth for the sector in the coming years.

Antique Stock Broking projects that India's state-run defence shipbuilders—Mazagon Dock Shipbuilders, Garden Reach Shipbuilders & Engineers (GRSE), and Cochin Shipyard—could experience a significant surge in orders, potentially tripling their combined order books by FY27. This anticipated boom underscores India's strategic focus on enhancing its naval capabilities and promoting domestic defence manufacturing.

Investors are advised to approach this rally with cautious optimism. While the current momentum reflects strong market confidence, financial experts urge a strategic, selective approach to stock picking, considering the long-term sustainability and valuation of these equities.

As India continues to prioritize self-reliance in defence and strengthens its military capabilities, the defence sector is poised for sustained growth, offering potential opportunities for investors aligned with the nation's strategic objectives.