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Business News/ Markets / Stock Markets/  Budget 2024: Defence stocks traded lacklustre as investors not enthused
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Budget 2024: Defence stocks traded lacklustre as investors not enthused

Major defence stocks like Hindustan Aeronautics Ltd (HAL) and Bharat Electronics Ltd (BEL) fell over 1.74 percent and 1.80 percent during an intraday trade on Thursday at noon.

Defence stocks declines post Interim Budget 2024-25 announcement. Photographer: Abhijit Bhatlekar/Bloomberg News.Premium
Defence stocks declines post Interim Budget 2024-25 announcement. Photographer: Abhijit Bhatlekar/Bloomberg News.

Finance Minister Nirmala Sitharaman's Interim Budget for 2024-25 speech did not include any significant announcement pertaining to the defence sector, which prompted a varied response in the stock market on Thursday, February 1.

Major defence stocks like Hindustan Aeronautics Ltd (HAL) and Bharat Electronics Ltd (BEL) fell over 1.74 percent and 1.80 percent during an intraday trade on Thursday at noon.

Also read: Budget 2024 Key Highlights: Income tax, infra, railways, EVs and more - 15 key takeaways from FM Sitharaman's speech

Meanwhile, shares of Data Patterns and Bharat Dynamics also slumped by 3.71 percent and 1.80 percent post announcement. Other stocks like Kaynes Technology, Mazagon Dock Shipbuilders, Mishra Dhatu Nigam and MTAR Technologies also declined between 0.5% - 3.5% on Thursday's trading session.

It is to be noted that the Interim Budget 2024-25 allocated the lion's share to the defence sector with an allocation of 6.2 lakh crore, a 13 percent increase over the previous years.

Within this, the allocation for "modernization and infrastructure development" saw a rise to 1.62 lakh crore, marking a 6 percent increase compared to the fiscal year 2023.

Also read: Budget 2024: Railway stocks fall amid lack of major announcements by FM Sitharaman; BEML bucks the trend

However, the allocation in the defense expenditure was considerably lower compared to that in the fiscal year 2024. In the FY24 budget, the government had elevated the defense budget by 13.8% to reach 5.94 lakh crore. Of this allocation, an expenditure exceeding 4 lakh crore has already been incurred in the ongoing fiscal year.

During her Interim Budget speech, Finance Minister Nirmala Sitharaman also announced the plans to launch a new scheme aimed at bolstering advanced technologies for defence purposes and accelerating the 'Atmanirbharta' (self-reliance) initiative.

Also read: Here's why Nifty 50, Sensex turned volatile after Budget 2024 speech

In their pre-budget anticipation analysis, Nuvama analysts projected a 5–8 percent augmentation compared to the previous budget. This anticipated growth is foreseen to be directed towards increased allocations for Research and Development (R&D), Unmanned Aerial Vehicles (UAVs)/drones, anti-drone systems, and related sectors.

The defense sector anticipates a year-on-year increase of 12–15 percent in capital outlay, driven by the ongoing modernization of systems and a heightened emphasis on indigenous production and export-oriented initiatives.

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Published: 01 Feb 2024, 02:44 PM IST
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