The biggest loser of the day was Bharat Dynamics Limited, which fell to the day’s low of Rs 1,887.60 on the NSE. The trigger was Motilal Oswal Financial Services (MOFSL) initiating coverage on BDL stock with a ‘Neutral’ rating and a target price of Rs 1,900, about 4% below its current market value, cautioning that the stock’s sharp run-up leaves little room for near-term upside.
The other top losers were Garden Reach Shipbuilders (GRSE), Solar Industries, Zen Technologies, Data Patterns (India), Hindustan Aeronautics (HAL), Paras Defence and Space Technologies, Astra Microwave Products, BEML, Cochin Shipyard, Mishra Dhatu Nigam, MTAR Technologies, DCX Systems, Unimech Aerospace and Manufacturing and Dynamatic Technologies, whose share prices slipped between 3.4% and 0.4%.
The Nifty India Defence Index was down by over 2% around 1:30 pm.
Bull rally
Defence stocks have had a strong run on the D-Street for the past three months. The Nifty India defence index has appreciated by over 42% with all 18 stocks riding on the bulls.
Defence PSU GRSE is the top gainer with 84% returns and is followed by Data Patterns and Paras Defence which have yielded 81% and 79% returns, respectively in the same period.
The rest of the stocks have also given double-digit returns. Cyient, MTAR and HAL are at the bottom of the ladder with returns of 15%, 21% and 22%, respectively.
The stocks have risen on account of global geopolitical tensions, including at the Indian doorstep with near near-warlike situation with rival Pakistan, as India vowed to take a deterrent step against terrorist installations following the Pahalgam killings.
The positive sentiments also rode on the overall recovery in the domestic stock markets as US President Donald Trump deferred the tariffs to a three-month period. This enabled a recovery in the domestic markets as Nift and BSE Sensex gained over 12% and 13% in the said period.
With relative calm, the premium on defence stocks have come down. The recent correction has extended 1-month fall to near 4% at the index level.
While defence stocks are known to move faster, valuation concerns remain a constant concern for investors.
Defence stocks outlook
Notwithstanding the recent correction, domestic brokerage ICICI Securities projects a strong growth trajectory for the domestic companies in FY26, stating that most of the companies under its coverage have guided for >15% revenue growth, driven by robust order inflow after Operation Sindoor.
In a report, this brokerage highlighted select names such as Bharat Dynamic Ltd (BDL), Solar Industries and Azad Engineering to likely post even higher growth in the range of 25–30%, the brokerage highlighted in its June defence sector digest.
ICICI Securities has also named its top stock picks in the sector, listing Solar Industries, Astra Microwave and Azad Engineering as its top picks in the private space. Among defence public sector undertakings (DPSUs), it prefers Hindustan Aeronautics Ltd (HAL), Bharat Electronics Ltd (BEL) and Midhani.
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