Defence stocks took a modest dip on Dec 29 even though the government cleared a huge procurement plan.
Defence Acquisition Council clears major procurement
The Defence Acquisition Council (DAC), chaired by Defence Minister Rajnath Singh, approved proposals worth about Rs 79,000 crore. The package includes radars, radios, automatic take‑off and landing recording systems, and other equipment for the army, navy and air force. Specific items cleared are the Loiter Munition System for artillery, low‑level lightweight radars, long‑range guided rockets for the Pinaka system, and an integrated drone‑detection and interdiction system for the Indian Army.
Market reaction on Dec 29
Despite the big approval, the Nifty India Defence index fell around 0.6% to close at 7,728.20. Most defence‑related shares slipped, though a few managed to post modest gains.
Stocks that fell
- Paras Defence: down about 2%
- Cyient DLM: down nearly 2%
- BEML: down more than 1%
- Bharat Electronics (BEL): down more than 1%
- Solar Industries India: down nearly 1%
- Data Patterns (India): down nearly 1%
- Hindustan Aeronautics (HAL): down nearly 1%
- Cochin Shipyard: down nearly 1%
- Garden Reach Shipbuilders & Engineers (GRSE): marginal loss
Stocks that rose
- Mishra Dhatu Nigam (Midhani): up more than 10%
- Mazagon Dock Shipbuilders: small gain
- Bharat Dynamics (BDL): small gain
- Astra Microwave Products: small gain
- Bharat Forge: small gain
What investors should consider
While the procurement approval signals long‑term demand for defence equipment, short‑term market sentiment can still be volatile. Investors may watch for further updates on order allocations and the financial health of the companies that missed the rally. Those with exposure to firms like Midhani that posted strong gains might review the reasons behind the jump before deciding on a position.
Disclaimer
Remember, this is perspective, not a prediction. Do your own research and consider your risk tolerance before making any investment decisions.