From Paras Defence to Apollo Micro, GRSE, Data Patterns: Defence stocks fall despite gains in Indian stock markets

Defence stocks witnessed sharp selling pressure on Thursday even as the broader Indian stock market traded in positive territory, with investors opting to book profits after the sector’s prolonged rally.

The Nifty India Defence Index declined 1.3% during the session, extending losses for the second consecutive trading day after falling 1.5% in the previous session. In comparison, the Nifty 50 index rose 0.3% in today's deals.

The decline came despite continued optimism surrounding the long-term prospects of India’s defence industry. Market participants attributed the weakness primarily to profit booking and elevated valuations following the strong run-up seen across defence counters over the past several months.

Among individual stocks, Paras Defence emerged as the biggest loser, plunging 6.5%. Apollo Micro Systems declined 5%, while Data Patterns and Nibe fell more than 4% each. Garden Reach Shipbuilders & Engineers (GRSE) and Avantel slipped 3%.

Other major defence names also traded lower. Bharat Dynamics Ltd (BDL), Mazagon Dock Shipbuilders and ZEN Technologies fell 2% each. Hindustan Aeronautics Ltd (HAL) was down 1%, while Bharat Electronics Ltd (BEL) declined 1.5%.

Analysts said the current correction reflects a classic phase of late-stage profit booking after a sustained rally in defence shares. Many stocks in the sector had delivered substantial gains, prompting investors to lock in profits. Apart from valuation concerns, changing geopolitical tensions and stock-specific volatility following quarterly earnings announcements have also contributed to the recent weakness in defence counters.

Defence Sector Outlook

Despite the near-term correction, analysts continue to maintain a constructive outlook on the defence sector, particularly on companies benefiting from government initiatives, localisation efforts and rising military expenditure.

Brokerages have also pointed to strong order books across the sector, increasing localisation of defence manufacturing, rising export opportunities and technology-driven programmes as major growth catalysts. Defence companies are increasingly benefiting from India’s push towards self-reliance in military procurement and growing demand for sophisticated systems across land, air and naval platforms.

“Recent geopolitical conflicts are accelerating military preparedness, driving strong demand for anti-drone systems and simulators, while the Indian government’s IDDM push supports indigenous defence solutions,” said the Choice Broking.

It believes that rising military preparedness and indigenous procurement initiatives are creating a strong foundation for sustained growth in the sector. As defence modernisation gathers pace, companies involved in advanced technologies, weapons systems, surveillance solutions and naval infrastructure are expected to remain key beneficiaries.

Choice Broking also highlighted the significant opportunity emerging in India’s naval industry. According to the brokerage, the sector is entering a high-growth phase supported by a short-to-medium-term order pipeline of approximately ₹2.35 trillion (around USD 25 billion) through 2035.

The brokerage said Mazagon Dock Shipbuilders, Cochin Shipyard and GRSE are likely to emerge as the primary beneficiaries of this opportunity, given their strong capabilities and positioning within the naval ecosystem.

The government has further reinforced its commitment to the maritime and shipbuilding sectors through the ₹69,700 crore Shipbuilding and Maritime Development package. The initiative is being supported by broader strategic frameworks such as Maritime India Vision 2030 and Maritime Kaal Vision 2047, both aimed at strengthening India’s maritime infrastructure and shipbuilding capabilities.

While the latest correction has weighed on defence stocks, analysts believe the long-term structural story remains intact. Investors, however, may continue to witness bouts of volatility as the market balances rich valuations against the sector’s strong growth prospects and expanding order pipeline.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.