Defence Stocks Surge Up to 9% as HAL, Mazagon Dock, and GRSE Track European Market Gains

Shares of major Indian defence companies, such as Hindustan Aeronautics Ltd (HAL), Mazagon Dock Shipbuilders, and Garden Reach Shipbuilders & Engineers Ltd (GRSE), saw significant gains of up to 10% on Tuesday, reflecting a similar rally in European defence stocks.

The surge in European defence stocks followed US President Donald Trump’s comments refusing to guarantee European security, prompting European leaders to reconsider their defence strategies and budgets. Concerns over NATO’s collective security and increased geopolitical tensions have driven investors toward defence stocks, anticipating higher government spending in the sector.

GRSE share price led the domestic rally with a 9.61% increase to ₹1,331.05 per share on the NSE, rebounding after four consecutive sessions of decline. HAL's share price saw a 4.49% rise to ₹3,330 per share, while Mazagon Dock Shipbuilders and Cochin Shipyard share price gained 5.52% and 7.4%, respectively. Bharat Electronics share price and Paras Defence & Space Technologies share price also rose by up to 3% during intraday trading.

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

European and Global Defence Stocks Rally

The upswing in Indian defence stocks mirrored strong performances in European markets. Germany’s Rheinmetall saw a 15% surge, Italy’s Leonardo jumped 17.3%, and France’s Thales climbed 16.7%. In the UK, BAE Systems advanced 14.3%, while Sweden’s Saab rose by 11.6%. The Stoxx Europe Aerospace & Defence Index experienced its largest single-day gain since November 2020, rising 8%.

The rally highlights a global trend of increasing defence expenditures amid geopolitical instability, particularly in Europe following tensions with Russia. Many European nations are expected to ramp up their military budgets, leading to greater demand for defence equipment and technology.

India’s Push for Defence Self-Reliance

Meanwhile, in India, the Empowered Committee for Capability Enhancement of the Indian Air Force, led by Defence Secretary Rajesh Kumar Singh, submitted its report to Defence Minister Rajnath Singh on March 3. The report outlines recommendations for enhancing medium- and long-term defence capabilities, emphasizing indigenisation and increased private sector involvement to improve efficiency and capacity.

With India’s Atmanirbhar Bharat initiative promoting self-reliance, the government has been actively encouraging domestic manufacturing in the defence sector. Several policy reforms, such as increased foreign direct investment (FDI) limits and production-linked incentives (PLI) for defence manufacturers, have been implemented to boost local production.

Additionally, India has been securing major defence deals and expanding its exports. HAL, for instance, has been in discussions with several countries for the sale of Tejas fighter jets and advanced helicopters. The government has also prioritized the procurement of indigenous defence systems, reducing reliance on imports and fostering the growth of homegrown companies.

Market Outlook and Investor Sentiment

Market analysts believe that the ongoing global geopolitical uncertainties, coupled with India’s defence modernization efforts, will sustain investor interest in the sector. As global military budgets expand, companies engaged in defence manufacturing, shipbuilding, and aerospace technology are expected to witness steady growth.

Experts also highlight that India’s defence sector could benefit from increased government contracts, joint ventures with foreign firms, and enhanced research and development (R&D) initiatives. Stocks of companies engaged in advanced defence technologies, unmanned systems, and cybersecurity solutions may also gain traction as defence forces worldwide shift towards modern warfare capabilities.

Given the current trends, defence stocks are likely to remain a strong investment avenue, driven by global security concerns and India’s push for strategic military advancements.