The stocks markets are under selling pressure as a result of the growing tension across West Asia. However, there is one sector that is holding up despite the doom and gloom all around. Yes, the defence stocks are buzzing today and the Nifty Defence is trading up nearly 2%.
Along with oil surges, volatility spikes, the defence stocks are back in the spotlight. The latest military escalation involving the United States and Israel against Iran has once again pushed aerospace and defence companies into sharp focus. What initially began as diplomatic engagement over Iran’s nuclear programme has now transformed into open conflict. This has raised geopolitical risk in the Middle East.
For Indian investors, this shift matters. Historically, periods of military conflict tend to accelerate defence preparedness across nations. That often translates into higher demand for missiles, surveillance systems, drones, ammunition and radar technologies.
As a result, defence linked stocks tend to see heightened interest. This is sometimes driven by sentiment and sometimes by expectations of future orders.
Markets falling but defence stocks see buying
Defence stocks continued to see buying interest, with several counters gaining between 1% and over 4% in the early trading session today.
Paras Defence and Space Technologies led the rally with gains of over 4%, while Data Patterns (India) rose close to 3%. MTAR Technologies and Bharat Dynamics advanced in the range of around 2-3%. Astra Microwave Products also climbed over 2%, while Zen Technologies added nearly 2%.
Among the other key players, Mishra Dhatu Nigam, Garden Reach Shipbuilders & Engineers, Solar Industries India and Mazagon Dock Shipbuilders gained in the range of about 1-1.5%.
Bharat Electronics rose around 1%, while Hindustan Aeronautics edged up close to 1%. Cochin Shipyard and BEML saw marginal gains of less than 0.5%.
Which defence segments could see demand?
According to Harshit Kapadia, VP at Elara Securities, past wars and the current conflict suggest that specific categories within defence could witness stronger traction.
“Taking cues from the earlier wars and current on-going war.
We expect 4 defence categories to see huge demand and to be a major demand driver for the future:
Air Defence Systems: including Missile (major categories – Surface-To-Air (SAM), Surface-To-Surface ((STS), Long range missile and Radars system to lock-on. Key Indian defence cos in the export market – Bharat Dynamics (Akash), Bharat Electronics (Radars), Solar Industries (Pinaka)
Drones/Loitering Munitions: short, medium and long range. Key potential Indian defence cos in the export market are: Zen Technologies, Solar Industries
Anti-drone system: Soft kill and Hard kill systems. Key Indian defence cos in the export market are Zen Technologies, Solar Industries and Bharat Electronics
Ammunition: 155mm shells. Key potential Indian defence cos in the export market are Bharat Forge, Solar Industries
Other companies are Axiscades Technologies. Component suppliers like Data Pattern, Astra Microwave, Centum Electronics, etc.”
A long brewing tension finds a flashpoint
The Middle East has been unstable since October 2023, when Israel declared war on Hamas in Gaza, a group backed by Iran.
The latest developments mark a significant escalation beyond proxy conflict. Market participants say this moment feels more intense than many previous geopolitical flashpoints since the Russia–Ukraine war began in 2022.
Broader markets under pressure
While defence stocks are attracting attention, the overall market mood remains cautious.
Shrikant Chouhan, Head Equity Research at Kotak Securities, highlighted the technical signals that suggest weakness in benchmark indices.
“The market has decisively broken the crucial support level (200 days SMA) of 25,300 and closed below it, indicating weakness in the broader market sentiment. The immediate level to watch is 25,000. A sustained move below this mark could increase pressure, as the next significant support is placed in the 24,500–24,350 zone,” he added.
He also added, “On the upside, the earlier support at 25,400 is now expected to act as a strong resistance. A decisive close above 25,400 could trigger a pullback rally towards 25,600.”