Defence sector stocks have witnessed a significant uptick in the Indian markets over the past week, driven by rising geopolitical tensions between India and Pakistan following the terror attack in Pahalgam on April 22. Key players in the defence manufacturing space, including public sector undertakings (PSUs) and private firms, have shown strong price momentum, reflecting heightened investor interest.
Shares of Hindustan Aeronautics Ltd (HAL) climbed from ₹4,307 on April 23 to peak at ₹4,609 before settling at ₹4,488 on Thursday, reflecting a 4.2% gain. Similarly, Garden Reach Shipbuilders & Engineers (GRSE) saw its stock price jump 10.5% over the same period, closing at ₹1,917 from ₹1,735.
Other major defence PSUs also followed suit. Bharat Dynamics Limited (BDL) witnessed a 7.2% increase in its share price, rising from ₹1,427 to ₹1,530. Meanwhile, Mazagon Dock Shipbuilders Ltd (MDL) reported an 11% surge, with shares climbing from ₹2,755 to ₹3,058.
Among private sector players, Paras Defence & Space Technologies led the rally, posting a notable 26.8% jump—from ₹1,072 to ₹1,359—marking the steepest gain among tracked stocks.
Geopolitical Drivers Behind the Rally
The market response appears to be driven by escalating border tensions and strategic decisions taken by both nations post the Pahalgam attack. Pakistan’s military posture has included issuing multiple naval alerts, enforcing a no-fly zone, and releasing a Notice to Airmen/Mariners (NOTAM) for specific zones in the Arabian Sea. Cross-border shelling along the Line of Control (LoC) has continued unabated, contributing to market anxiety.
India’s assertive countermeasures—such as suspending the Indus Waters Treaty and halting movement across the Attari-Wagah border—have further cemented expectations of a rise in defence expenditure and military preparedness.
Domestic Defence Manufacturing in Focus
Market analysts attribute the recent surge in stock prices to both immediate security concerns and longer-term policy expectations. There is growing belief that the Indian government will accelerate its push toward indigenised defence production under the ‘Atmanirbhar Bharat’ (self-reliant India) initiative, leading to a likely increase in domestic orders for defence equipment.
Adding to this sentiment is India’s finalisation of a ₹63,000 crore intergovernmental defence deal with France for 26 Rafale Marine fighter jets—a major procurement that underscores the government’s defence modernisation agenda.
Market Sentiment and FOMO Effect
In addition to fundamental developments, behavioural factors are also influencing the market. The “Fear of Missing Out” (FOMO) phenomenon is reportedly driving retail and institutional investors to jump into defence stocks, leading to rapid price gains.
Because PSUs like HAL, GRSE, and MDL have a significant proportion of shares held by the government, their low float in the market makes them more susceptible to price swings due to concentrated buying. Analysts caution that such rallies, often led by sentiment and limited supply, can also face swift corrections if profit booking kicks in or momentum fades.
As tensions remain high and the government’s strategic focus sharpens on defence capabilities, the sector may continue to draw investor attention—though with expected bouts of volatility.
