Defence stocks in India rallied by up to 5% on Wednesday, tracking gains in the broader Indian stock market today. The Nifty India Defence index rose as much as 1.2%, supported by strong buying interest across key constituents.
Astra Microwave Products share price emerged as the top gainer, surging 5.7%, followed by Mishra Dhatu Nigam, Bharat Forge, BEML and Bharat Electronics (BEL) shares, which rose between 2% and 3% each during the session.
The rally in defence stocks coincided with Prime Minister Narendra Modi’s visit to Israel, a development that has drawn global attention following a ceasefire agreement between Israel and Hamas.
Prime Minister Modi departed for Israel on a two-day state visit on February 25. This marks his first visit to Israel since 2017, when he became the first Indian Prime Minister to undertake a standalone visit to the country.
During the visit, the two leaders are expected to review progress under the India–Israel Strategic Partnership and explore further collaboration across key sectors, including defence and security, science and technology, innovation, agriculture, water management, trade and economic cooperation, and people-to-people ties. They are also likely to exchange views on regional and global issues of mutual interest.
With PM Narendra Modi’s Israel visit in focus, the market’s defence narrative is back in sharp relief — strategic signalling abroad, and orderbook visibility at home, said Jickson Sajee, Research Analyst, INVasset PMS.
He noted that India–Israel ties have long been anchored in security cooperation, spanning missiles, UAVs and surveillance systems, and the visit underscores continuity in that engagement.
Separately, the government earlier this week unveiled India’s first comprehensive counter-terrorism policy, “Prahaar”, outlining a multi-layered strategy anchored on a zero-tolerance approach.
The framework emphasises intelligence-led prevention and disruption of extremist activities, with the objective of denying terrorists, their financiers and supporters access to funding, weapons and safe havens.
Defence stocks in focus: Time to buy?
Defence companies are expected to remain in focus, as strengthened India–Israel ties could translate into enhanced defence collaboration. Analysts believe companies such as Bharat Electronics (BEL), Bharat Dynamics (BDL), and Hindustan Aeronautics (HAL) stand to benefit from potential joint ventures and technology partnerships between the two countries.
“With the upcoming defence JVs alongside Israel gaining momentum, we foresee significant tailwinds for key players like BEL, BDL, and HAL, particularly in high-growth areas such as drones and missiles. These collaborations could unlock advanced tech transfers, bolstering order books and margins in the coming quarters,” says Avinash Gorkshkar, an independent markets analyst and a wealth advisor.
Sajee highlighted that defence stocks tend to react swiftly to headlines around counter-terror positioning or cross-border tensions, yet their valuations are ultimately driven by executable contracts, delivery milestones and cash flows.
“The broader backdrop, however, remains supportive: New Delhi’s emphasis on indigenisation, technology transfer and reducing import dependence is not just rhetoric anymore; it is increasingly visible in procurement patterns and domestic manufacturing scale-up,” said Sajee.
Speaking on the numbers, he added that India’s defence production has crossed ₹1.5 lakh crore in FY25, while exports have scaled to over ₹23,000 crore — both record highs. The Union Budget 2026 has allocated ₹6.81 lakh crore to the Ministry of Defence, maintaining India’s position among the world’s top military spenders.
“For investors, that creates a structural opportunity but not a blanket buy signal. Quality names with robust order books, improving execution and export traction can be accumulated on corrections. However, where valuations already discount aggressive growth, caution is warranted. In defence, the cycle is long, margins can be lumpy, and patience often pays more than momentum chasing,” said Sajee.
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.
