Defense Stocks: BSE CPSE index jumped 0.9 per cent today due to rise in shares of defense and shipbuilding companies. At the same time, Nifty’s Thematic India Defense Index also jumped by more than 2 percent. It was supported by 3-5 per cent rise in shares of Bharat Dynamics Limited (BEL), Hindustan Aeronautics Limited (HAL) and Mazagon Dock, shipbuilders GRSE and Cochin Shipyard. Nifty India Defense Index is close to 5 percent gain in a month, with many stocks rising by more than 10 percent such as MTAR Tech by 18%, DCX India by 10% and Paras Defense by 11%.
Strong support from JPMorgan’s positive support
Global brokerage firm JP Morgan has started coverage of three defense sector stocks – Bharat Electronics Limited (BEL), Hindustan Aeronautics Limited (HAL) and Mazagon Dock Shipbuilders. The brokerage has given overweight rating to BEL and HAL and neutral rating to Mazagon Dock Shipbuilders. According to JPMorgan, after the huge fall, the valuation of defense stocks has become attractive. It brightened up this segment. JPMorgan has fixed the target price of Rs 340 for investment in Bharat Electronics and Rs 5135 for HAL.
How is the atmosphere in the defense sector?
Veteran investor and BSE member Ramesh Damani had also recently indicated a strong bullish sentiment after the sharp fall in defense stocks. Some stocks had fallen by up to 50 percent. Ramesh Damani had said that if the earnings of defense sector companies are good and the order book is also strong, then they can make a great comeback. The government is continuously increasing expenditure on defense and there is also emphasis on indigenous development, which is strengthening the order book of the companies.
In the budget of this financial year 2025, the allocation for defense sector has been increased to Rs 6.22 lakh crore. Recently, Vikas Gupta of Omniscience Capital had said that there are many segments for investment in the defense sector such as energy securities, rare and strategic materials, logistics and supply chains supporting defense forces and financial etc.
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