Defence stocks extended their rally in the Indian stock market on Thursday, supported by strong buying momentum following robust defence production data. The gains lifted the Nifty India Defence index by nearly 1%, after a sharp 4% surge in the previous session. The index has now advanced for five consecutive trading sessions.
Among the top gainers on the Nifty India Defence index, Aequs and Zen Technologies climbed more than 5% each. Other significant gainers included Dynamatic Technologies, Solar Industries India, Astra Microwave Products, MTAR Technologies, Paras Defence and Space Technologies, and Bharat Electronics (BEL) shares, which rose between 1% and 3%.
The rally was triggered by data released by the Ministry of Defence on Wednesday, which showed that India’s defence production reached an all-time high of ₹1.78 lakh crore in FY26, marking a 15.6% increase from ₹1.54 lakh crore in FY25.
India’s defence exports also recorded robust growth, surging 63% YoY to ₹38,400 crore in FY26. The share of public sector defence companies in total defense exports improved significantly to 55%, while historically, it was largely dominated by the private sector for the supply of sub-components.
The strong production and export performance, backed by the government’s policy support and rising global demand for defence equipment, has strengthened investor sentiment towards the sector and supported a strong rally in Indian defence stocks. The Nifty India Defence index has gained 8.85% in five sessions, while the index has jumped 23% on a year-to-date (YTD) basis.
Meanwhile, the performance of defence companies in FY26 remained strong, with healthy order inflows across the sector. Defence companies reported decent execution, with stronger-than-expected EBITDA margins and net profit outperforming expectations.
Management commentaries also indicate a strong pipeline ahead for the defense sector players.
With a resolution of the US-Iran war in West Asia in sight, brokerage firm Motilal Oswal Financial Services believes the focus would now shift toward the replenishment of ammunition, missiles, and critical inventories, alongside the acquisition and upgrade of various platforms. This is likely to open up export markets for defense players, apart from the domestic defense ordering.
“Focus would also be more on drones, anti-drones, electronic warfare, air defense control systems and active protection systems on both domestic and international markets. We expect these orders, along with large platform orders, to start materializing during FY27,” said the brokerage firm.
Defence stocks to buy
Motilal Oswal Financial Services maintains its positive stance on the defense sector. Among defence stocks, Bharat Electronics (BEL) remains its preferred pick. Here’s the list of defence stock picks:
Bharat Electronics | Buy | Target Price: ₹510
Hindustan Aeronautics | Buy | Target Price: ₹5,500
Bharat Dynamics | Neutral | Target Price: ₹1,150
Astra Microwave Products | Buy | Target Price: ₹1,580
Zen Technologies | Neutral | Target Price: ₹1,400
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.
