When global markets are shaking, where do investors look for safety? On Dalal Street, many eyes are now turning towards defence stocks. While benchmark indices have been under pressure due to rising tensions between the US-Iran, the defence pack is quietly showing strength.
In today’s trading session, the defence sector stocks are in sharp focus, not just because of global developments, but also due to fresh big-ticket government orders that could support company earnings in the coming years.
Let’s take a look at the key reasons why the sector is in the focus –
Government signs big defence deals
In an important development, the Ministry of Defence on Tuesday (March 3) signed two major contracts worth about Rs 5,083 crore to boost the strength of the Indian Coast Guard and the Indian Navy. The agreements were signed in New Delhi in the presence of Defence Secretary Rajesh Kumar Singh.
A major portion of this, that is about Rs 2,901 crore has been awarded to Hindustan Aeronautics for the supply of six Advanced Light Helicopters (ALH) Mk-III. These helicopters will be deployed for maritime duties with the Indian Coast Guard.
The procurement has been cleared under the Buy (Indian–Indigenously Designed, Developed and Manufactured) route, which is aimed at promoting domestic defence production and reducing dependence on imports.
Defence index stands firm amid market fall
At a time when the broader market is struggling, the Nifty India Defence Index has shown resilience. On Monday, when the Sensex and Nifty fell over 1% due to global worries, the defence index ended around 0.5 per cent higher. During the day, it even climbed nearly 4% before settling lower from its peak.
If we look at its recent performance, the defence index has delivered steady gains. Over the past week, the index is up about 2%. In one month, it has gained roughly 1.5%. Over three months, it has risen over 4%, and in six months about 6%. On a one-year basis, it has delivered a sharp return of almost 57%.
So far this year, it is higher by nearly 6%.
Why war fears help defence stocks
The rising conflict between the US and Iran has unsettled global markets. After internal unrest in Iran, the US and Israel carried out strikes starting February 28. Iran responded with missile attacks targeting Israeli military sites, US bases in Iraq and Syria, and positions in Saudi Arabia and the UAE.
Whenever global tensions rise, investors worry about oil prices, economic slowdown and uncertainty. That is why broader markets usually fall.
But defence stocks often behave differently. The logic is simple. During conflicts, countries increase defence preparedness and spending. Investors expect higher demand for defence equipment and technology, which can benefit defence companies.
Lessons from past – What happened during Operation Sindoor
A similar trend was seen last year during Operation Sindoor after the Pahalgam attack on April 22, 2025. When India carried out precision strikes on May 7, markets initially reacted with caution.
The defence index fell about 1% on May 7 and nearly 0.9 per cent on May 8. But this weakness did not last long. On May 9, the index jumped around 3%. It gained about 0.7% on May 12 and rose another 4% per cent on May 13.
What investors may watch today
With fresh government contracts, ongoing global tensions and much more, the defence stocks are likely to remain active on traders radar.
Market participants will closely monitor price movements within the sector to see whether the recent outperformance continues.