Defence stocks slide for fifth straight session
Apollo Micro Systems led the fall, dropping 5.37%. MTAR Technologies slid 3.12%. Axiscades Engineering Technologies fell 2.14%. Garden Reach Shipbuilders & Engineers and Solar Industries also declined, down 1.47% and 1.43% respectively.
Not all stocks were in the red. Astra Microwave Products rose 2.45%, while Bharat Electronics gained 1.42%. Cochin Shipyard edged up 0.06%, Bharat Forge added 0.21%, BEML rose 0.04%, and Aequs India was marginally higher at 0.16%, bucking the otherwise weak session.
The 30-day picture shows the depth of the correction across the sector. Bharat Dynamics has fallen 19.12% over the past month, the steepest decline among index constituents. Mazagon Dock Shipbuilders is down 13.79%, and Zen Technologies has dropped 11.8%. Cochin Shipyard and GRSE have each fallen over 11% in the same period.
Despite the recent weakness, the Nifty India Defence index remains up 12% over the past year. MTAR Technologies has been the standout performer on a one-year basis, gaining 289.41%. Paras Defence and Space Technologies is up 79.37%, and Dynamatic Technologies has risen 72.06%. However, several stocks remain in negative territory over the year, including Bharat Dynamics, down 29.55%, and Cochin Shipyard, down 27.29%.
The five-day decline follows a sharp rally that had pushed the index past the 10,000 mark on September 9 driven by optimism around large-scale defence acquisition approvals. The subsequent correction has been attributed to profit booking and a broader risk-off mood in equity markets amid rising crude oil prices and elevated bond yields.
Concerns over Solar Industries' Rs 12,951 crore acquisition of South Africa's Omnia Holdings also spooked investors. The size of the transaction ? nearly $1.4 billion, funded entirely in cash ? raised concerns around funding, valuation and integration risk, and the stock came under heavy selling pressure once the deal was announced.
The weakness comes even as a foreign brokerage flagged strong earnings visibility for the sector, citing a multi-year defence spending cycle supported by domestic procurement and rising exports. It expects the order cycle to be led by defence electronics, aerospace, missiles and unmanned systems.
The brokerage initiated coverage on Hindustan Aeronautics and Bharat Electronics with 'buy' ratings. It started Bharat Dynamics, Astra Microwave Products, Data Patterns and Solar Industries with 'hold' ratings, and initiated Mazagon Dock Shipbuilders with a 'reduce' rating.
The recent Defence Acquisition Council (DAC) approvals had strengthened expectations of a large domestic order pipeline. About 98% of the Rs 1.10 lakh crore of proposals approved on September 7 were earmarked for Indian industry, covering equipment across the three armed forces.
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