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Defence stocks saw a sharp rebound on Wednesday as investors eye Foreign Direct Investment (FDI) policy boost in the defence sector
Defence Stocks
Shares of defence-related companies saw a strong rally on Wednesday, with Garden Reach Shipbuilders & Engineers (GRSE) leading the charge, soaring by 14.9% to Rs 1,404.50 on the BSE. This surge followed comments from the Defence Secretary, who stated that relaxed foreign direct investment (FDI) policies and a streamlined industrial licensing process would drive growth in the defence sector.
Stocks across the defence sector posted strong gains, with Data Patterns soaring by 14.4% to Rs 1,631, Bharat Dynamics climbing 9.1% to Rs 1,102.25, and Zen Technologies advancing 10% to Rs 1,068.65. Other notable players, including DCX Systems and Mazagon Dock Shipbuilders, also recorded double-digit gains during intra-day trading.
The sector’s growth outlook was bolstered by remarks from Defence Secretary Rajesh Kumar Singh on February 17, who stated that the Indian defence industry is on the verge of “massive expansion.” He highlighted that relaxed foreign direct investment (FDI) policies and streamlined industrial licensing procedures would be key drivers of growth in the domestic defence industry.
Singh further emphasized the importance of public-private partnerships in positioning India as a hub for advanced manufacturing in the sector. Citing budget figures, he revealed that the defence budget of Rs 6.21 lakh crore would rise by 9.5% to Rs 6.81 lakh crore in 2025-26.
The surge in defence stocks was driven by optimism over increased foreign investment in domestic defence companies, as investors took advantage of recent price corrections in the sector.
In December, Elara Securities upgraded several defence stocks, including HAL, BDL, Bharat Electronics, and Garden Reach Shipbuilders, anticipating stronger order flows. The sector has attracted significant investor interest in recent years, fueled by the government’s push for self-reliance under the Atmanirbhar Bharat initiative. While defence stocks had delivered impressive returns of up to 400%, driven by import restrictions, increased FDI, and a focus on defence exports, recent profit-taking had caused a sharp correction in valuations.
