Astra Microwave Products' scrip surged 5.13 per cent, while BEML climbed 4.57 per cent on the BSE.
Shares of Bharat Electronics also rose by 4.56 per cent.
Pipavav Defence and Offshore Engineering Company gained 2.57 per cent in the morning, but later it was trading with a loss of 0.38 per cent.
Moving ahead with the economic reforms, the Cabinet last night cleared the long-delayed proposal for raising FDI limit in defence to 49 per cent.
The decision taken at the Cabinet meeting headed by Prime Minister Narendra Modi came barely two weeks after the one to raise the FDI cap in insurance sector from 26 per cent to 49 per cent.
FDI ceiling in the sensitive defence sector has been hiked to 49 per cent from current 26 per cent, with the condition that the control in joint venture manufacturing of defence equipment will remain in Indian hands.