Indian defence stocks surged on March 21 after the Defence Acquisition Council (DAC) approved eight capital acquisition proposals worth over Rs 54,000 crore. Shares of key defence firms like Bharat Dynamics Ltd (BDL), Hindustan Aeronautics Ltd (HAL), and DCX Systems saw strong gains, driven by optimism surrounding the government’s aggressive push for indigenous defence procurement.
Nifty India Defence Index extends winning streak
The Nifty India Defence index saw its seventh straight session of gains, rising more than 1 per cent to trade at 6,245. Institutional investors showed strong buying interest in a number of defense stocks during the rally, which was widespread.
Stock-wise performance: BDL, HAL, DCX Systems, and others shine
BDL shares rose more than 3 per cent on expectations that the business would get major orders under the approved proposals. HAL shares jumped nearly 2 per cent to Rs 3,897 each, while DCX Systems topped the rise with a 6 per cent increase to Rs 254 per share. Paras Defence and Bharat Electronics Ltd (BEL) also traded higher, up about 2 per cent and 1 per cent, respectively. Meanwhile, Apollo Micro Systems, a major producer of Airborne Early Warning and Control (AEW&C) systems, saw its stock jump about 4 per cent.
Key projects driving investor confidence
The DAC’s approvals include the procurement of Varunastra Torpedoes, an indigenously developed ship-launched anti-submarine torpedo, which will significantly enhance the Indian Navy’s anti-submarine warfare capabilities. Additionally, a proposal to upgrade the Indian Army’s T-90 tanks with 1,350 HP engines was approved, aimed at improving mobility in high-altitude areas.
For the Indian Air Force, the procurement of AEW&C aircraft systems was cleared, reinforcing its surveillance and combat capabilities. The government has positioned 2025 as the ‘Year of Reforms’ for defence acquisitions, emphasizing speedier procurement and efficiency.
Brokerages bullish on defence stocks
Citing good order visibility, ICICI Securities has given BDL, BEL, and Astra Microwave “Buy” recommendations. For BDL, BEL, and Astra Microwave, the brokerage set target prices of Rs 1,400, Rs 350, and Rs 935, respectively, suggesting possible gains of 12, 18, and 36 per cent.
Macquarie believes that faster acquisition timelines will enhance growth visibility and improve capital efficiency for Indian firms investing in defence R&D. Over the next 12-24 months, these approvals are expected to translate into significant order inflows across the defence manufacturing ecosystem. The brokerage maintains Bharat Electronics (BEL) as its top pick in India’s defence electronics sector, while also highlighting L&T as a key beneficiary of the upcoming opportunities.
Outlook: Budget boost could fuel further rally
Analysts predict that the business will continue to grow as India prioritizes defence modernization and self-reliance. The 2018 budget is expected to increase funding for indigenous defence manufacturing, giving additional benefits to companies like BDL, HAL, and DCX Systems. Market analysts predict that institutional investors will continue to acquire these companies, fueled by India’s defence sector’s long-term development prospects.
