Paras Defence, HAL, Mazagon Dock Gain Up to 8%: Here's Why Defence Stocks are Rallying

Paras defence and space technologies soared over 8% on Monday as concerns over escalating tensions between India and Pakistan continue to rise. Other defence stocks followed suit as India signed a mega deal with France to purchase 26 Rafale Marine aircraft, signalling an increased focus on the defence sector in the coming weeks.

In the last month alone, the Nifty India Defence index has surged around 10% with Paras Defence, Data Patterns (India), Garden Reach Ship, Bharat Electronics and Mazagon Dock as the top gainers. In contrast, the NSE Nifty50 index has increased by around 5%. Analysts believe that the Defence sector will remain in focus in the coming weeks.

"While India has signed the deal to purchase 26 Rafael Marine combat aircraft worth around Rs 64,000 crore from France, reports are also suggesting that the cabinet might give its approval for Rs 25,000 fund for Maritime Development Fund (MDF) boosting the shipping sector," said Siddhartha Khemka, head - research, wealth management, Motilal Oswal Financial Services.

Defence Sector in Focus

"With Indian equities witnessing sustained buying interest, we expect the gradual up-move in the market to continue with some volatility on the back of geo-political developments," Khemka said.

In the last 3 months, the Defence index has surged over 15%. On Tuesday, shares of Paras defence and space technologies were trading at Rs 1,243, up by over 8.68% on the National Stock Exchange. Shares of shipbuilding company Mazagon Dock also soared to 7.4% and were trading at Rs 2,992 price level during the morning trade session.

The terrorist attack in the Pahalgram region of Jammu and Kashmir shook the nation last week, which claimed the lives of 26 tourists. The Indian government has vowed to take action against the incident. "I strongly condemn the terror attack in Pahalgam, Jammu and Kashmir.....Those behind this heinous act will be brought to justice...they will not be spared! Their evil agenda will never succeed. Our resolve to fight terrorism is unshakable and it will get even stronger," PM Modi said after the terrorist attack.