Bharat Dynamics to BEL — defence stocks surge as India-Pakistan tensions escalate; should investors buy?
Most defence stocks, including Bharat Dynamics (BDL), Bharat Electronics (BEL), Paras Defence and Space Technologies, Zen Technologies and DCX Systems, jumped 4 to 8 per cent in morning trade on the NSE on Friday, May 9, amid escalating tensions between India and Pakistan.
Thematic index Nifty India Defence jumped over 3 per cent, with most stocks up with significant gains.
The index was 3 per cent up at 7,086 around 10:15 AM, with shares of Mishra Dhatu Nigam, Data Patterns (India), Hindustan Aeronautics (HAL), Astra Microwave Products, Mazagon Dock Shipbuilders, Cochin Shipyard, BEML and Data Patterns (India), up between 1 to 2 per cent.
Equity benchmark Nifty 50 was 0.86 per cent down at 24,066 at that time.
Defence stocks jumped while benchmark indices fell by about a per cent due to a fresh escalation in India-Pakistan tensions. Amid rising tensions, the order flow for defence companies is expected to rise. The market is discounting this.
"With rising tensions between India and Pakistan, defence companies have been directed to ramp up production, providing a sentiment-driven boost to defence stocks," said Avinash Gorakshakar, the head of research at Profitmart Securities.
The Indian Army shot down over 50 Pakistani drones during a large-scale counter-drone operation along the Line of Control (LoC) and the International Borders (IB) on Wednesday night, according to sources confirming to ANI.
The Indian government on Thursday said that the Indian Armed Forces neutralised the air defence system at Lahore.
"The Indian Armed Forces targeted Air Defence Radars and systems at a number of locations in Pakistan. Indian response has been in the same domain with the same intensity as Pakistan. It has been reliably learnt that an Air Defence system at Lahore has been neutralised," said a Ministry of Defence statement.
After the Pahalgam terror attack on April 22, which left 26 persons dead, India conducted Operation Sindoor on May 7 and targeted terror camps in Pakistan and Pakistan-Occupied Kashmir.
Defence stocks are expected to enjoy positive momentum in the near term due to the prospects of increased demand. However, the valuation of most stocks in the segment is rich, which seems to have made experts cautious about them.
Experts believe the defence sector may offer long-term potential, but at present, valuations appear stretched. Investors are advised to avoid sentiment-driven buying and wait for more reasonable entry points.
"Investors should remain cautious and avoid chasing the news blindly. Valuation remains a key consideration—buying at elevated levels purely based on short-term headlines may not be prudent for long-term investing," said Gorakshakar.
Gorakshakar said if the market corrects, select defence stocks could offer attractive entry points. But indiscriminate buying at any price is unwise.
"Once news flows begin to indicate easing tensions, these stocks may lose momentum. Moreover, the conflict is not expected to persist over an extended period, which limits the sustainability of this rally," Gorakshakar said.
Prashanth Tapse, Senior VP (Research) at Mehta Equities, is positive about Hindustan Aeronautics Ltd (HAL) and Data Patterns (India).
Tapse pointed out that he recent India-Pakistan episode has underscored India's growing capability in producing powerful and effective defence equipment. The global spotlight on the efficiency, quality, and impact of these systems could drive increased international orders in the coming years.
"At current valuations, select defence stocks such as Hindustan Aeronautics Ltd (HAL) appear reasonably priced and may offer attractive long-term opportunities. Long-term investors may also consider Data Patterns (India) as a potential addition to their portfolios," Tapse said.
While investors may selectively bet on defence stocks, it could also be time to consider other sectors with low valuations and strong potential to outperform.
Experts say this is the time to accumulate quality stocks from domestic-oriented sectors.
"Smart investors should consider accumulating quality stocks at current levels. Focus on domestic-oriented sectors such as cement, infrastructure, capital goods, hotels and hospitality, and consumer-driven businesses, which are well-positioned to benefit from India's long-term growth story. While sectors like IT, pharma, and metals may currently face uncertainty, potential trade agreements could provide much-needed clarity," Gorakshakar said.
"Investors should stay optimistic about India's prospects—after all, foreign institutional investors (FIIs) continue to invest, indicating their confidence that the current challenges are temporary," Gorakshakar pointed out.
Read all market-related news here
Read more stories by Nishant Kumar
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
23 minutes ago
- Time of India
Pakistan to nominate Trump for Peace Nobel over 'intervention' with India
US President Donald Trump ISLAMABAD: In a move likely to stir diplomatic discussion across the region, the Shehbaz Sharif-led Pakistan govt announced on Saturday that it will formally recommend US President Donald Trump for the 2026 Nobel Peace Prize, citing his diplomatic intervention during the recent India-Pakistan military crisis, reports Omer Farooq Khan. In an official statement shared on X, the Pakistan govt credited Trump's "decisive intervention" and "pivotal leadership" with helping de-escalate a rapidly intensifying standoff between the two nuclear-armed neighbours. Islamabad said it responded with a calibrated military action - Operation Bunyanum Marsoos - described as a "measured" and "precise" strike intended to restore deterrence without targeting civilian areas. Pakistan's govt claimed Trump engaged both Islamabad and New Delhi through high-level diplomacy at a moment of heightened regional volatility, securing a ceasefire that averted a wider conflagration. "President Trump demonstrated strategic foresight and statesmanship, preventing a broader conflict that could have had catastrophic consequences for the region," the statement read. The govt also praised Trump for his "sincere" willingness to assist in resolving the Kashmir dispute - an issue Pakistan maintains is central to lasting peace in South Asia. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 5 Books Warren Buffett Wants You to Read In 2025 Blinkist: Warren Buffett's Reading List Undo India, however, has consistently rejected third-party involvement in Kashmir, reiterating that the issue must be resolved bilaterally under the Simla Agreement. The Pakistani statement expressed hope that Trump's "legacy of pragmatic diplomacy" would continue to play a role in addressing global flashpoints, including the humanitarian crisis in Gaza and rising tensions involving Iran. Trump, who is yet to respond publicly, has previously highlighted his role in managing past India-Pakistan tensions, including in 2019 following the Pulwama-Balakot incident. His earlier offer to mediate on Kashmir was firmly rebuffed by New Delhi. The Nobel Peace Prize nomination process permits formal recommendations from heads of state, national lawmakers, and certain academic and diplomatic figures. The Norwegian Nobel Committee does not comment on individual nominations. If successful, Trump would join a select group of American leaders - US Presidents Theodore Roosevelt, Woodrow Wilson, Jimmy Carter, and Barack Obama - who have received the Nobel Peace Prize.
Indian Express
23 minutes ago
- Indian Express
Delhi govt mulls bringing back private liquor vends under new excise policy
Private players could make a comeback in Delhi's liquor shops. The Delhi BJP government, which is preparing a new excise policy, is considering reintroducing private liquor shops in the Capital — just as it was in the old excise regime before 2021. The government plans to implement the new policy by July 1 with an aim to increase revenue, curb corruption and bring transparency. According to sources, the government is likely to provide licences to private players to provide a good walk-in experience for customers. 'About 100-150 private liquor shops, mostly in malls and other premium locations, are being considered. The numbers will be finalised once the policy is ready. The modalities of how to issue the licence, whether through an e-auction or e-lottery, are currently being discussed. A meeting of a high-level committee set up to prepare the policy, which is headed by the Chief Secretary, was also held on Friday. Issues such as the number of shops, licensing, etc, were discussed,' sources said. Under the pre-2021 policy, both government and private liquor shops operated in Delhi. In November 2021, the government — the AAP was in power at the time — had exited the liquor business and handed things over to private vendors, with an aim to cut down corruption. The policy soon ran into controversy and investigations by multiple agencies like the Enforcement Directorate and the Central Bureau of Investigation. In 2022, the government scrapped this policy and brought back the old excise regime — but only liquor shops run by government corporations were allowed to operate. Almost all top AAP — including former chief minister Arvind Kejriwal, AAP Rajya Sabha MP Sanjay Singh, and former deputy chief minister Manish Sisodia — were jailed in the case. Currently, a major issue facing Delhi is the unavailability of popular and good quality brands of whisky, beer, vodka, gin, and several others. 'Some popular brands are not in Delhi as their parent company was blacklisted from selling liquor in the national capital following complaints of irregularities and court cases during the implementation of the now-scrapped liquor policy… Less popular brands have entered the scene, which has pushed customers to neighbouring states… The government is planning to increase the availability of popular brands and is likely to reintroduce some that are currently not available in Delhi shops…,' said sources. Popular choices like Chivas Regal, Blenders Pride and Royal Stag, part of the Pernod Ricard brand, are not available in Delhi. Pernod Ricard India's application for an L-1 licence was rejected earlier. Benoy Babu, a regional manager at PRI, was a witness in the CBI's excise case. Babu was eventually arrested by the ED. Meanwhile, discussions on rationalising brand licence fees and retail margins are also underway, said sources, adding that excise duty and retail licensing are also likely to be increased under the new policy. 'The retail margin cap is Rs 50 for Indian-Made Foreign Liquor and Rs 100 for foreign liquor. This is on a per-bottle basis. Government-run shops have monopolised the retail business by pushing less popular brands at the range of Rs 400 to Rs 600, instead of stocking premium brands. Also, cheaper brands sell fast… Thus, discussions are on to rationalise these margins to increase revenue as well as make premium brands available for customers,' said sources. Industry sources said private retailers have started searching for properties in the city to set up shop. Currently, there are over 700 liquor shops in Delhi run by the four government corporations — Delhi Tourism and Transportation Development Corporation, Delhi State Industrial and Infrastructure Development Corporation, Delhi Consumer's Cooperative Whole-sale Store and Delhi State Civil Supplies Corporation. The Excise Department has asked the four corporations to carry out document validation online by June 30. Last week, Chief Minister Rekha Gupta said several reforms will be incorporated into the new policy, including scientific testing of liquor quality, digitisation of the sale system, curbing illegal sales, and ensuring transparency in the licensing process. The high-level committee is also studying policies implemented in Delhi earlier and those in neighbouring states.
The Hindu
37 minutes ago
- The Hindu
FATF report links dual-use cargo seized by India in 2020 to Pakistan missile agency
A dual-use equipment seized by India from a Pakistan-bound merchant vessel in 2020 is linked to Islamabad's National Development Complex, which is involved in the country's missile development programme, a new report by the Financial Action Task Force (FATF), the global anti-terror financing watchdog, has said. The report listed the case under a section on the misuse of the maritime and shipping sectors, including to transport a range of commodities, including dual-use equipment. 'In 2020, Indian Customs authorities seized an Asian-flagged ship bound for Pakistan. During an investigation, Indian authorities confirmed that documents mis-declared the shipment's dual-use items,' the FATF report said. 'Indian investigators certified the items for shipment to be 'autoclaves', which are used for sensitive high-energy materials, and for insulation and chemical coating of missile motors,' the report said. It said these sensitive items are included in dual-use export control lists of the Missile Technology Control Regime (MTCR). The bill of lading of the seized cargo provided evidence of the 'link between the importer and the National Development Complex, which is involved in the development of long-range ballistic missiles', it said. The export of equipment such as autoclaves without formal approval from various authorities is a violation of the existing law, the FATF said. Pakistan's National Development Complex (NDC) has played a crucial role in the development of Pakistan's missile programme. India seized the dual-use equipment from merchant vessel Da Cui Yun at Kandla port in Gujarat on February 3, 2020. Loopholes The report noted significant vulnerabilities in the global financial system in countering the financing of weapons of mass destruction (WMD). "Despite the grave threat posed by proliferation financing, only 16 per cent of countries assessed by the FATF and its global network have demonstrated high or substantial effectiveness" in a process that evaluates the implementation of targeted financial sanctions under the United Nations Security Council resolutions on proliferation. The report said that unless the public and private sectors urgently bolster technical compliance and effectiveness, those seeking to finance WMD proliferation will continue to exploit weaknesses in the existing controls. The report provided a detailed analysis of the evolving methods and techniques used to evade proliferation financing-related sanctions. 'Illicit actors are employing increasingly sophisticated methods to evade sanctions and circumvent export controls,' it said.
