Defence stocks rally as MoD approves military purchases worth Rs 38,900 cr

Shares of defence companies were in focus at the bourses on Friday and rallied up to 12 per cent on the BSE after the Ministry of Defence (MoD) approved the purchase of weapons and equipments worth Rs 38,900 crore.

The ministry said procurement from Russia and upgrade of MiG-29s would cost about Rs 7,418 crore, while Hindustan Aeronautics (HAL) would build the Sukhoi-30MKI fighters in Nashik for an estimated Rs 10,730 crore. CLICK HERE TO READ FULL REPORT

Following the news report, HAL's stock rallied 10 per cent to Rs 849 on the BSE on the back of heavy volumes. It was trading close to its 52-week high price of Rs 896, touched on January 22, 2020.

Besides, Bharat Dynamics hit a 52-week high of Rs 374, up 12 per cent on the BSE. The stock has rallied 29 per cent already in the ongoing week after the company's net profit more-than-doubled at Rs 309.72 crore in March quarter (Q4FY20) on the back of strong operational income. The state-owned defence company had logged profit of Rs 124.12 crore in the year-ago quarter.

The company’s revenue from operations during the quarter under review rose 64 per cent to Rs 1,435 crore from Rs 877 crore in the corresponding quarter of the previous fiscal.

In the month of May, the government hiked foreign direct investment (FDI) via automatic route from 49 per cent to 74 per cent as part of reforms in the defence sector to boost the government's Make in India campaign.

Walchandnagar Industries, Bharat Electronics, Bharat Forge and Apollo Micro Systems, and other stocks which are engaged in defence business were also gained in the range of 3 per cent to 10 per cent on the BSE. In comparison, the S&P BSE Sensex was up 0.54 per cent at 36,038 points at 12:40 pm.