Defence stocks were in focus on Tuesday, September 8, with several counters outperforming the broader market after the Defence Acquisition Council (DAC) approved Acceptance of Necessity (AoN), or in-principle administrative approval, for various acquisition proposals of the Defence Forces worth an estimated ₹1,10,000 crore.
The announcement triggered buying across defence shares even as the broader market remained weak. The Nifty India Defence Index gained 1.3% during the session, significantly outperforming the benchmark Nifty, which declined 0.4%.
Among the major gainers, Astra Microwave Products rallied 4.3%, while BEML surged 3.6%. Data Patterns gained 2.6%, and MTAR Technologies and Apollo Micro Systems advanced 2.3% each. Hindustan Aeronautics, Paras Defence and ZEN Technologies rose 2% each, while Bharat Electronics Ltd (BEL) was up 1%. Bharat Dynamics Ltd (BDL) added 0.7% and Mazagon Dock Shipbuilders gained 0.5%.
Why Are Defence Stocks Rising?
The latest rally followed the DAC’s meeting chaired by Defence Minister Rajnath Singh on September 7, 2026. The council granted AoN to multiple acquisition proposals covering the Indian Army, Navy and Air Force, with the overall estimated value standing at about ₹1,10,000 crore.
Rajnath Singh highlighted the domestic procurement component of the approvals, saying in a tweet:
“Chaired the meeting of Defence Acquisition Council (DAC) today. The DAC accorded Acceptance of Necessity (AoN) to various acquisition proposals of the Defence Forces at an estimated cost of about ₹1,10,000 crore.
Of the total AoNs accorded, approximately 98% of procurements will be made from the Indian Industry. It shows our commitment towards developing a strong defence Industrial base in India,” Defence Minister Rajnath Singh said in a tweet.
DAC Approval Details
For the Indian Army, the approvals cover Chemical Biological Radiological and Nuclear (CBRN) Recce Vehicles, High Mobility Vehicles (HMV), Self-Propelled Mechanical Mine Layers (MML), Advanced Light Helicopters (ALHs), Trawl Tanks and the Sarvatra Bridge System.
The CBRN Recce Vehicles will be used to detect, identify, monitor and mark areas contaminated with CBRN agents. HMVs are intended to strengthen operational capabilities, logistics support and mobility in challenging terrains, while MMLs will provide fast and responsive mine-laying capabilities in difficult terrains. ALHs will undertake complex missions across different terrains and operational situations for the Indian Army and Indian Air Force. Trawl Tanks and the Sarvatra Bridge System will provide composite crossings to fighting formations during operations across varied terrains.
For the Indian Navy, AoN was approved for Arudhra Radars as well as the design and development and subsequent procurement of Marine Gas Turbines (MGT). Arudhra Radars will replace existing Air Route Surveillance Radars at various Naval Air Stations, while MGT, which is a warship propulsion system, is expected to reduce dependence on foreign vendors.
The Indian Air Force also received approvals for proposals aimed at strengthening the war-fighting capabilities of its fighters, transport aircraft and helicopters. The DAC additionally approved procurement of Ground-Based Multi-Purpose Jammer (GBMPJ) and installation of the Defence Forces Secure Access Card (DEFSAC) System.
GBMPJ will provide effective jamming against adversaries’ radars, while DEFSAC will replace paper-based identity cards, passes and permits with an interoperable Radio Frequency Identification-based smart-card system.
Crucially for domestic defence manufacturers, approximately 98% of the total procurements covered by the latest AoNs will be sourced from Indian industry.
Defence sector outlook
Domestic brokerage house Motilal Oswal Financial Services Ltd (MOFSL) remained positive on the defence sector following the DAC’s approval of ₹1.1 lakh crore worth of AoN proposals covering the Army, Navy and Air Force.
The brokerage said DAC approvals during FY27 so far had reached ₹1.62 lakh crore. Across FY25 to year-to-date FY27, approvals worth ₹13 lakh crore had been accorded for the Indian defence sector, which MOFSL said was expanding the total addressable market for domestic defence companies.
MOFSL also pointed to government measures aimed at opening missile production to Indian private-sector players, which it said had improved visibility for future order inflows across the sector.
“In the near to medium term, finalisation of large tenders for defence PSUs should be keenly watched out for. We reiterate our positive stance on the sector and maintain Bharat Electronics (BEL) as our preferred pick,” MOFSL said.
Defence Stocks to buy
For Bharat Electronics, MOSL maintained its estimates and reiterated a buy rating with an unchanged target price of ₹530, based on 45 times two-year forward earnings.
Hindustan Aeronautics Ltd (HAL) also retained a buy rating from the brokerage, with its target price unchanged at ₹5,800.
For Bharat Dynamics Ltd (BDL), MOFSL maintained a neutral rating and retained its target price at ₹1,270, based on 42 times two-year forward earnings.
Astra Microwave Products received a reiterated buy rating, with MOFSL keeping its target price unchanged at ₹1,900, based on 42 times two-year forward earnings.
For Zen Tech, the brokerage maintained a neutral rating with an unchanged target price of ₹1,600, based on 30 times two-year forward earnings.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
