Defence index trades firm in weak market, rises 4% in one week; here's why
At 11:15 AM on Friday; the Nifty India Defence was the sole sectoral index trading in green and up 0.08 per cent, as compared to 1 per cent decline in the Nifty 50.
 "Defence index trades firm in weak market, rises 4% in one week; here's why")
Nifty India Defence index movement today
Shares of the frontline defence companies were trading firm, gaining up to 4 per cent on the National Stock Exchange (NSE) in Friday's intra-day trade after the Defence Acquisition Council (DAC), accorded Acceptance of Necessity (AoN) for defence proposals worth ₹3.6 trillion.
At 11:15 AM; the Nifty India Defence index was the sole sectoral index trading in green up 0.08 per cent, as compared to 1 per cent decline in the Nifty 50. The Defence index was up 0.50 per cent in intra-day trade.
Astra Microwave Products, Hindustan Aeronautics (HAL), Bharat Forge, Axiscades Technologies, MTAR Technologies, Bharat Forge and BEML were up in the range of 1 per cent to 4 per cent in intra-day deals.
Meanwhile, the Nifty India Defence index was quoting higher for the fifth straight day, gaining 4 per cent during the period. In comparison, the Nifty 50 was down 0.55 per cent during the same period.
What’s driving the India Defence index?
The DAC, chaired by Defence Minister Rajnath Singh, on Thursday gave its in-principle nod for the purchase of various combat items, including French-made Rafale fighter jets and the US-made maritime aircraft. The DAC approved the “acceptance of necessity” (a technical term) for proposals from the three services estimated to be worth about ₹3.6 trillion, a Ministry of Defence media statement said.
For the Indian Air Force (IAF), approvals include MultiRole Fighter Aircraft (MRFA – Rafale), Combat Missiles and Air-Ship Based High Altitude Pseudo Satellite (AS-HAPS), with majority of MRFA to be manufactured in India. The Army has received AoN for Anti-Tank Mines (Vibhav) and overhaul of T-72 tanks, BMP-II and ARVs.
The Navy secured approvals for P-8I aircraft and 4 MW Marine Gas Turbine-based Electric Power Generators under the Make-I category, while the Coast Guard will procure EO/IR systems for Dornier aircraft. The approvals significantly strengthen domestic manufacturing under the indigenisation push.
The large AoN outlay (~₹3.6 trillion) materially improves medium-to-long term order visibility for Indian defence manufacturers, especially with majority domestic content in MRFA and Make-I naval projects, according to ICICI Securities.
Companies likely to benefit include Hindustan Aeronautics (possibly for AS-HAPS and M-88 engines), Bharat Dynamics (combat missiles like Astra air-to-air, Scalp missiles) and Bharat Electronics along with Astra Microwave and Data Patterns (for avionics, radar, EO/IR systems, EW).
Dynamatic Technologies and Azad Engineering can be a beneficiary in the P-8I project for manufacturing aero structures and engine parts respectively considering Boeing and CFM International being key customers. Bharat Forge would be a key beneficiary in Anti-tank Mines (Vibhav).
Overall, the brokerage firm believes the approvals reinforce the government’s sustained focus on domestic procurement, localisation and technology transfer, strengthening multi-year growth visibility for the listed defence ecosystem.
Meanwhile, in Union Budget 2026, the Ministry of Defence is one of the ministries with the highest increase in outlay. Appreciable increase is towards other equipment and naval fleet, even as expenditure on aircraft and aero engines comes down. The defence sector saw the highest allocation with a growth of 17.6 per cent despite the fact that capex for FY26RE was overachieved.
The higher allocation to defence underscores the government’s twin priorities of strategic preparedness and domestic capability-building. Beyond immediate security needs, capital-led defence spending has a powerful economic multiplier—supporting indigenous manufacturing, technology development and skilled employment, according to Varun Gupta, CEO, Groww Mutual Fund
A sustained shift towards domestically sourced defence capital can strengthen India’s strategic autonomy while creating durable growth opportunities across the broader industrial ecosystem, said Varun Gupta. ======================================== Disclaimer: View and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers discretion is advised.