A significant rally has been seen in Indian defence stocks following Operation Sindoor, an ongoing military operation as per official sources. While a temporary ceasefire is in place, this operation has brought global attention to India’s defence capabilities. Although India still imports various defence equipment, Operation Sindoor saw strong participation from domestic defence companies.
There were reports that Pakistan had planned missile attacks, including one targeting Delhi, but all threats were successfully neutralized. After dismantling Pakistan’s air defence missile systems, India carried out strong retaliatory strikes using fighter aircraft.
Following this success, several Indian defence sector stocks witnessed a sharp surge. This market rally is driven by a report suggesting that the Indian government may allocate an additional ₹50,000 crore to the military in response to the operation. This would be over and above the existing defence budget, not a part of it.
India’s current defence budget stands at ₹6.81 lakh crore (approximately $77.4 billion). If the additional ₹50,000 crore is approved, it would push the defence budget past the ₹7 lakh crore mark for the first time. Presently, 13.4% of India’s total national budget is dedicated to defence.
The Nifty Defence Index has surged almost 50% in just the last 3 months, reflecting the market’s strong confidence in the sector, especially after recent developments like Operation Sindoor.
Over the past 3 months, several defence-related stocks have delivered exceptionally high returns. Paras Defence & Space has more than doubled with a return of 103.56%, followed by Garden Reach Shipbuilders at 91.69%, and Data Patterns (India) Ltd at 88.88%. Bharat Dynamics Ltd and Astra Microwave Products posted returns of 71.84% and 71.39%, respectively. Mazagon Dock Shipbuilders delivered a return of 69.09%, while Cochin Shipyard Ltd rose by 67.35%. Zen Technologies returned 66.19%, Solar Industries came in at 62.72%, and Mishra Dhatu Nigam rounded out the list with 59.13% gains. These figures highlight the sector’s sharp rally and growing investor confidence.
This potential allocation is likely to be addressed during the Winter Session of Parliament, scheduled between 25th November and 20th December. The funds would be directed toward the purchase of weapons, advanced defence technologies, and equipment.
The market has already priced in this potential development. By the time an official announcement is made in the Winter Session, the news may already be factored into stock prices, possibly limiting further upside in the short term.
The ₹50,000 crore boost is expected to support the Atmanirbhar Bharat (Self-Reliant India) initiative, with 80–90% of the orders likely to go to domestic companies, especially government-owned defence firms.
India’s defence exports have surged 34-fold, from ₹686 crore in 2013–14 to ₹23,622 crore in FY2024–25. The Indian government has set a target of reaching ₹50,000 crore in defence exports by 2029.
Disclaimer: This article is for educational purposes only. Please consult a financial advisor before making any investment decisions.
