Last Updated:June 17, 2025, 13:45 IST
Defence stocks surged on June 17, driven by escalating geopolitical tensions in the Middle East as the Israel-Iran conflict entered its fifth day
Defence stocks surged on June 17
Defence Stocks Rally: Defence stocks surged on June 17, driven by escalating geopolitical tensions in the Middle East as the Israel-Iran conflict entered its fifth day. The Nifty Defence Index rose over 1.3% to trade around 8,982, reflecting strong investor interest in the sector.
This renewed momentum follows multiple global and regional triggers. In May, India conducted targeted strikes on terrorist outfits in Pakistan under the codename ‘Operation Sindoor’, boosting confidence in domestic defence capabilities. While India-Pakistan tensions have since eased, the ongoing Russia-Ukraine war and the latest flare-up between Israel and Iran have continued to support defence stock valuations.
Mazagon Dock Shipbuilders led the rally, rising nearly 5% to ₹3,322 and snapping a four-day losing streak. Data Patterns followed with a gain of over 2.5%, while Bharat Dynamics (BDL) and Garden Reach Shipbuilders and Engineers (GRSE) advanced more than 2% each. Cochin Shipyard rose 1.7%, and other notable gainers included DCX India, Paras Defence, and BEML—all up over 1%.
Meanwhile, Hindustan Aeronautics (HAL), Bharat Electronics (BEL), Solar Industries, Cyient DLM, and Astra Microwave Products were trading with modest gains. However, a few stocks like Zen Technologies saw marginal losses despite the broader sectoral uptrend.
Analysts Remain Divided on Outlook
Ajit Mishra, SVP – Research at Religare Broking, noted that while defence stocks are benefiting from global instability, volatility remains a concern. “Defence stocks have rallied strongly post Operation Sindoor, corrected due to profit-booking, and are now rising again due to Middle East tensions. While long-term prospects are intact, valuations are becoming a concern, and investors should be selective.”
He added that India’s current defence spending—at just 1.9% of GDP—leaves ample room for future growth, especially as the country pushes for greater self-reliance in military manufacturing.
Sankhanath Bandyopadhyay, Economist at Infomerics Valuation and Ratings, echoed this view. He pointed out that the Indian government aims to increase defence spending to 3–4% of GDP in the next decade and has set a target of ₹25,000 crore in defence exports by FY26. “Export-driven defence companies with strong fundamentals will be the real beneficiaries of this strategic shift,” he said, advising investors to maintain a balanced portfolio with an eye on dividend-yielding stocks.
Global Geopolitical Developments Fuel Risk Appetite
The ongoing conflict between Israel and Iran took a sharp turn after former U.S. President Donald Trump posted dramatic warnings on social media, urging the evacuation of Tehran and reiterating his stance against Iran’s nuclear ambitions. His statements have raised concerns of possible U.S. military action, amplifying fears of a broader regional conflict.
Crude oil prices have also reacted to these developments, as the Middle East remains a key hub for global energy exports. Although some global leaders, such as French President Emmanuel Macron, have hinted at the possibility of a ceasefire, Trump publicly denied any such efforts, saying the situation is “much bigger.”
Long-Term Growth Prospects Remain Strong
Robin Arya, founder of investment firm GoalFi, said despite elevated valuations, the long-term outlook for India’s defence sector remains robust. “The Nifty Defence Index jumped over 18% in May, adding nearly ₹1.8 lakh crore in market cap. This is underpinned by a ₹16 lakh crore domestic procurement pipeline and an ambitious ₹3 lakh crore export target by 2029.”
He acknowledged that while near-term corrections may occur, the structural improvements in order execution, return ratios, and demand make selective investment in defence stocks worthwhile.
Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More
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