Bharat Electronics shares tanked 9.71 per cent, while Astra Microwave Products was down 8.45 per cent on the BSE.
Among others, BEML fell by 4.99 per cent, Walchandnagar Industries (4.78 per cent) and Dynamatic Technologies (2.3 per cent).
FDI in defence sector raised to 49 per cent, Jaitley said while presenting the Budget for 2014-15.
As per the current FDI policy, up to 26 per cent FDI is permissible in the defence sector subject to licensing through government route.
Meanwhile, selling was also seen in the broader market with the BSE benchmark Sensex trading lower by 280.40 points to 25,164.41 during noon trade.