Shares of Tejas Networks, Paras Defence and Spaces, ideaForge Technology, Bharat Electronics (BEL), Hindustan Aeronautics (HAL) surged upto 15% on Monday, March 2 following heightened geopolitical tensions in West Asia, resulting in a full-scale war in the area.
According to experts, defence stocks typically respond favourably to such conflicts, as they lead to an increased need for defence equipment and the components necessary for their production.
Harshal Dasani, Business Head, INVasset PMS, explained that Defence stocks is witnessing renewed investor interest. Heightened geopolitical tensions increase the probability of higher global defence spending, faster procurement cycles, and policy prioritisation of indigenous manufacturing. India has already been on a structural defence push with rising budget allocations and a strong focus on domestic production. Any prolonged conflict globally tends to accelerate capital allocation toward security and strategic capability.
“While short-term volatility cannot be ruled out, defence stocks often act as relative outperformers during periods of geopolitical stress, whereas aviation remains sensitive to oil volatility and demand uncertainty,” said Dasani.
Antique Stock Broking noted that BEL and BDL rely on Israel for their supply chains. Any extended geopolitical tensions with Iran could create supply chain risks for these companies, a situation reminiscent of what was previously seen during the Israel-Palestine conflict, they mentioned.
The conflict in the Middle East intensified over the weekend following the bombing of Iran by the US and Israel. Iran’s retaliation, which involved attacks on other GCC nations, escalated the gravity of the situation; however, the conflict is anticipated to be relatively brief, spanning from several days to a few weeks, due to the imbalance between the two sides and the weakening of Iran’s leadership.
