Defence stocks such as Bharat Electronics Ltd (BEL), Hindustan Aeronautics Ltd (HAL), Bharat Dynamics Ltd (BDL) and Paras Defence and Space Technologies Ltd climbed up to 5 per cent ahead of the Union Budget 2025 on hopes of 6-12 per cent rise in capital allocation to the sector.
Data Patterns (India) Ltd shares rose 3.84 per cent to Rs 2,293.35. BEL shares were up 2.25 per cent at Rs 299.40. HAL rose 2.38 per cent to Rs 4,035.50. BDL shares gained 2.28 per cent to Rs 1,329.95. Paras Defence and Space Technologies Ltd added 2.17 per cent to Rs 1,161.35. GRSE and Mazagon Dock Shipbuilders rose up to 2 per cent while Cochin Shipyard was trading 0.8 per cent lower.
"Despite boasting the world’s fifth-largest Defence budget, India sources a staggering 60 per cent of its weapon systems from international markets. The good news is that the Indian government is trying to strengthen the nation’s defence prowess by reducing dependence on imports. Large and sustainable opportunities for domestic players also exists particularly in engineering services and component sourcing, on backdrop of goal of reaching," Mehta Equities said.
This brokerage is expecting a rise in allocation towards modernising systems, such as hypersonic weapons, drones and next-gen fighter jets. It has HAL, BEL and Data Patterns as its preferred picks.
Ajay Garg, CEO at SMC Global Securities said the defence sector is expected to see continued prioritisation in the upcoming Budget, given India’s focus on enhancing self-reliance in defense manufacturing under Atmanirbhar Bharat and increasing defense capabilities amidst regional security concerns.
The Defence Ministry’s budget for capital expenditure (capex) is likely to see an increase, with estimates suggesting a 10–12 per cent rise, he noted.
Ravi Singh, Senior Vice-President (Retail Research) at Religare Broking said defence stocks to such as HAL and BEL were in focus ahead of the Budget.
"HAL is favored for its strong growth potential driven by increasing defence contracts and a robust order book. Analysts project significant inflows, making it a solid investment choice. BEL stands out due to its leadership in defence electronics and consistent performance, supported by strong research and development capabilities. Both companies are well-positioned to benefit from rising government spending and initiatives aimed at enhancing self-reliance in India's defence sector," he said.