Share Market News / Amidst the rally in the market, there is a rush to buy defense stocks… this is the reason

The stock market saw a rise on Friday, the Sensex closed at 83,432.89, up 193.42 points. Defense stocks surged due to the Defense Ministry's indigenous weapon purchase proposal of Rs 1.05 lakh crore. Stocks like Paras Defense, HAL, BEL, BDL registered a rise of 1-9%.

Share Market News: On July 4, 2025, the Indian stock market witnessed a boom on the last trading day of the week. The key index Sensex closed at 83,432.89 with a gain of 193.42 points. During this period, the shares of defense sector companies like Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL), and Bharat Dynamics Limited (BDL) registered a significant jump. The main reason for this boom was the approval given by the Ministry of Defense for the purchase of indigenous weapons. Let us take a detailed look at the reasons and effects of the boom in this sector.

Big decision of Defense Ministry

The Ministry of Defense approved 10 military procurement proposals worth Rs 1.05 lakh crore in the meeting of the Defense Acquisition Council (DAC) on July 3, 2025. In this meeting chaired by Defense Minister Rajnath Singh, the purchase of indigenous defense equipment under the 'Buy Indian IDDM' (Indigenously Designed, Developed, and Manufactured) category was given the green signal. These proposals include:

Armored Recovery Vehicles: To enhance military mobility.

Electronic warfare systems: For technological superiority in modern warfare.

Surface-to-air missiles (SAM): To strengthen air defense.

Integrated inventory systems: To improve logistics efficiency.

Naval mines and mine counter measure vessels: To boost maritime security.

Submersible autonomous vessels: To enhance the autonomous capabilities of the Navy.

The Ministry of Defense shared information about this decision on the social media platform X and said that these purchase proposals will further strengthen the capabilities of the Indian Army, Navy and Air Force. After this announcement, the Nifty India Defense Index saw a rise of about 2%, which increased investor confidence in defense sector stocks.

Defense stocks surge

The effect of this decision of the Ministry of Defense was visible in the defense sector stocks as soon as the stock market opened on July 4, 2025. Stocks of several major companies registered notable gains:

Paras Defence and Space Technologies: Up over 9% in early trade. The reason for this surge was not only the DAC approval but also the company's first stock split (1:2 ratio), with the ex-split date being on July 4.

Garden Reach Shipbuilders and Engineers: Up 2.5% in intraday trade.

Mazagon Dock Shipbuilders: Up 2%.

Bharat Dynamics Limited (BDL): Up over 1%.

Solar Industries: Up over 1%.

Bharat Electronics Limited (BEL): Up nearly 1.5%.

Hindustan Aeronautics Limited (HAL): The stock closed at 4993.15, up nearly 1.5%.

Reasons behind the surge

There were several reasons behind this surge in the defense sector. First, the Defense Ministry's emphasis on indigenous weapons and the approval of Rs 1.05 lakh crore has instilled confidence in investors. This move is going to promote the Atmanirbhar Bharat initiative, which has increased the hope of indigenous defense companies getting big orders. Second, the government's policies and increasing budget allocation in the defense sector have strengthened the long-term growth prospects of defense companies. Third, global geopolitical tensions and increasing demand in the defense sector have also attracted investors' attention to this sector.

What does it mean for investors?

This boom in the defense sector is a positive sign for investors. The government's increasing focus on indigenous defense equipment and continuous orders can further strengthen the balance sheets of defense companies. However, experts advise that investors should analyze the fundamentals of companies, order books, and global defense market trends before investing in defense stocks.