Defence Stocks Fire Up On Escalating West Asia Tensions; Paras Defence, BEL Gain Up To 5%

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Defence Stocks Rally: Shares of defence companies surged on June 23 after the US launched strikes on key Iranian nuclear facilities
Defence Stocks Rally: Shares of defence companies surged on June 23 after the US launched strikes on key Iranian nuclear facilities, heightening tensions in the Middle East and fuelling expectations of increased defence spending globally. The Nifty Defence index rose nearly 1.7% to hover around 9,037 in morning trade.
Zen Technologies and Paras Defence were the top performers, rising up to 5% and trading at around Rs 1,995 and Rs 1,718, respectively. Zen Tech was locked in its upper circuit. Other notable gainers included Astra Microwave, Bharat Electronics (BEL), Garden Reach Shipbuilders (GRSE), and Data Patterns — each gaining over 2%. Mazagon Dock rose nearly 2%, while Cochin Shipyard and DCX India added over 1.5% each.
BEL also emerged as the top gainer on the Sensex. Hindustan Aeronautics (HAL), Bharat Dynamics (BDL), and BEML traded with modest gains, while Solar Industries bucked the trend with marginal losses. Meanwhile, drone-tech firm IdeaForge hit the upper circuit with a 10% rally to Rs 631.05.
The rally came after former US President Donald Trump announced a successful strike on three of Iran's main nuclear enrichment sites. In a televised address, Trump claimed the facilities had been 'completely obliterated" using bunker-buster bombs and Tomahawk missiles, while also warning Iran of further action if a peace deal is not reached.
Israeli Prime Minister Benjamin Netanyahu hailed the move, calling it a 'bold decision" to deny nuclear weapons to a dangerous regime. Though US officials clarified that Washington is not at war with Tehran, the heightened rhetoric added to global market volatility.
Indian defence stocks have already been in focus in recent months. In May, India carried out cross-border strikes under 'Operation Sindoor' against terror outfits in Pakistan, boosting investor interest in the sector. The ongoing Russia-Ukraine war has further supported sentiment toward defence plays.
However, analysts remain divided. While some expect strong order inflows to continue, others caution that current valuations in the sector may be running ahead of fundamentals.
'Defence stocks have been highly volatile lately, rallying strongly after Operation Sindoor, then seeing profit booking, and now rising again amid Middle East tensions. This reflects a mix of short-term momentum and long-term optimism. Geopolitical risks and a stronger push for domestic defence manufacturing have boosted investor confidence. With India's defence spending at just 1.9% of GDP, there's significant room for long-term growth," said Ajit Mishra, SVP, Research, Religare Broking.
'However, the sharp rally has brought valuation concerns, making near-term volatility likely. Investors should remain selective, focusing on companies with robust order books, sound financials, and strong execution. While the momentum may fluctuate, the long-term outlook for India's defence sector remains structurally attractive in an increasingly uncertain global landscape," he added.
Sankhanath Bandyopadhyay, Economist at Infomerics Valuation and Ratings, meanwhile, said, 'Defence stocks look promising due to the ongoing geopolitical tussle between Iran and Israel. Moreover, the Indian government is likely to enhance defence spending from the current ~2 per cent of GDP to 3–4 per cent over the next decade. Further, the government has targeted Rs 25,000 crore in defence exports by 2025–26."
He added, 'Investors can focus on export-driven defence stocks with long-term potential. In the current scenario, geopolitical tensions will likely be lingering between different countries, especially as being reflected in rising tensions in the Middle East. Investors should carefully assess the financials and outlook of such stocks before investing, and there should be a judicious mix so that a healthy dividend can also be earned."
Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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