Kotak Fund Beats 98% Peers Raises Bets On Defence Stocks

A ₹25,000 crore fund managed by Kotak Mahindra Asset Management Company has increased its exposure to defence stocks, as it continues to outperform 98% of its peers over the past five years, according to data compiled by Bloomberg.

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

Open Account Now

The Kotak Large and Midcap Fund, managed by the asset manager overseeing about $60 billion globally, has focused on sectors such as defence, industrials, and financials, which together account for more than half of its portfolio, as per Bloomberg data.

Defence Exposure Increases

The fund has added Astra Microwave Products Ltd in March 2026, even as Indian equity markets saw their weakest performance since the pandemic during the month. The stock addition reflects continued allocation toward defence-related companies.

Bharat Electronics Ltd remains among the key holdings in the portfolio, supported by strong order pipelines and improved execution visibility in the sector, according to statements by the fund manager cited by Bloomberg.

As per data, a defence sector index, which includes stocks in the manufacture of aircraft and missiles, has seen average gains exceeding 50% over the last three years, surpassing some other sector-specific indices.

Sector Backed by Policy Initiative

Efforts by the government to boost indigenous production and cut down import dependency have backed the defence sector. The emphasis on domestic production and capacity enhancement has also helped in making orders more visible for firms.

As reported by Bloomberg, changing warfare trends, such as the higher use of electronic devices, have been responsible for consistent orders of domestically made defence equipment.

Broader Market Context

India’s equity markets have been under stress this year, as the MSCI India Index is down by more than 5% for the year, while the broader Asia index has risen by 11%, according to Bloomberg reports.

The factors contributing to market behavior include worries about declining earnings growth and geopolitical events like the West Asia conflict.

Financial Stocks Are Also Getting Attention

There have been increases in financial stocks due to the recent correction in the markets. Additions include IndusInd Bank Ltd, Shriram Finance Ltd, and Bajaj Finance Ltd, according to Bloomberg data.

The financial sector has seen pressure in recent months, partly due to regulatory measures affecting currency markets and a decline in shares of major lenders.

Despite market volatility, the fund has remained fully invested while continuing to adjust allocations across sectors.

The portfolio positioning reflects a focus on sectors with visible earnings and order flows, with defence and financials forming a significant share of allocations.