HAL, BEL Shares Gain Ground Amid NATO's Push for Increased Defence Spending

Shares of major Indian defence companies, particularly Hindustan Aeronautics Ltd (HAL) and Bharat Electronics Ltd (BEL), attracted investor attention on Thursday after the North Atlantic Treaty Organization (NATO) announced a significant increase in defence spending across its member countries. The announcement triggered renewed optimism around defence manufacturing, boosting domestic sector sentiment.

Early in the session, HAL shares rose over 2%, while BEL also recorded healthy gains, with investors betting on a rise in export and partnership opportunities for Indian defence firms. The broader Nifty India Defence index saw upward momentum in early trade, advancing close to 1% before paring gains later in the day.

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Global Cues Lift Sector Outlook

The rally comes on the back of fresh commitments made at the NATO summit, where member nations pledged to substantially ramp up military expenditure. The move is aimed at enhancing regional security capabilities in light of ongoing global geopolitical tensions, especially in Eastern Europe and parts of the Indo-Pacific.

Analysts believe this uptick in global defence budgets opens the door for Indian firms to tap into increased demand, especially as global players look to diversify supply chains and reduce dependence on traditional Western contractors.

Long-Term Tailwinds for Indian Defence Stocks

In recent years, the Indian government has aggressively promoted domestic defence manufacturing under the 'Atmanirbhar Bharat' initiative, encouraging public and private sector participation through policy support, export incentives, and increased defence allocation in the Union Budget.

With HAL delivering fighter aircraft and helicopters domestically and exploring foreign export deals, and BEL expanding its product portfolio across radars, electronic warfare systems, and avionics, both companies are increasingly being viewed as serious players in the global defence supply chain.

Traders also noted a steady pickup in institutional interest in defence-linked stocks, especially amid ongoing global realignment in military procurement.

Sector Still Has Room to Run

While Thursday’s initial rally in the Nifty India Defence index cooled off slightly as the session progressed, market participants remain bullish on the long-term growth prospects for India’s defence manufacturing sector.

As the global landscape becomes increasingly volatile, investors are expected to keep a close watch on defence-focused counters, with geopolitical tailwinds and policy support driving potential upside.