Defence stocks tumble amid profit booking; Bharat Dynamics down 6%, HAL falls 5%

After a relentless rally in the last few trading sessions, defence stocks took a brief pause in today's session as investors engaged in profit booking. Shares of Bharat Dynamics tumbled nearly 5.6% to ₹1,536 apiece, while those of Hindustan Aeronautics and Bharat Electronics fell by 4.8% and 3%, respectively.

Multibagger shipbuilding stocks such as Mazagon Dock Shipbuilders, Cochin Shipyard, and Garden Reach Shipbuilders & Engineers dropped between 3% and 5%. 

Other defence stocks, including ideaForge Technology, Zen Technologies, Avantel, PTC Industries, Solar Industries India, Astra Microwave Products, MTAR Technologies, and Walchandnagar Industries, fell between 1% and 5.5% in intraday trade. Despite the broader downturn, Paras Defence held its ground, trading with a 2% gain at ₹1,437 apiece.

Also Read: Defence stocks surge up to 20% with Paras Defence, HAL, Mazagon Dock hitting new peaks

Defence stocks resumed their upward trend on June 5, following the ruling Bharatiya Janata Party (BJP) securing sufficient support from key allies to form a coalition government, ensuring Modi’s return to power for a third consecutive term.

Investors are buoyed by the prospects of policy continuity and ongoing economic reforms. One significant area of emphasis for the government is the defence sector, which is undergoing a transformative phase characterised by increasing funding, expanding defence budgets, and rising defence exports.

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Over the past decade, the government has launched several initiatives to enhance self-reliance in supplying advanced weapon systems to the Indian Armed Forces and facilitating exports to Friendly Foreign Countries (FFCs).

 These efforts have opened growth avenues for domestic defence manufacturing companies. With the Defence Ministry aiming for 70% self-sufficiency in weaponry by 2027, significant opportunities are on the horizon for industry players.

Additionally, under the 'Atmanirbhar Bharat Programme,' the Defence Ministry has placed '101+ Defence items' under import embargo, further reinforcing the push towards self-reliance. The government has set a target of US$ 6.02 billion (Rs. 50,000 crore) worth of annual defence exports by 2028-29.

Also Read: Hindustan Aeronautics gets defence ministry RFP for 156 light combat helicopters

For the financial year 2024–25, the Ministry of Defence has been allocated a total budget of US$ 74.8 billion (Rs. 6,21,540.85 crore), which is 13.04 % of the total budget. 

The total defence budget represents an enhancement of 4.72% over the budget of 2023-24 and 18.35% over the allocation for 2022-23.

Disclaimer: We advise investors to check with certified experts before taking any investment decisions.