Nifty Defence cracks below 200-DMA; analysts flag key support at 7,300

The Nifty Defence index has shed nearly 7 per cent so far in December; the index was seen quoting below the long-term average for the first-ever time.

The Nifty Defence index has cracked below the long-term 200-Day Moving Average (200-DMA) on the daily chart for the first-time since its inception. In Tuesday's intra-day trade the Defence index hit a low of 7,363, before recouping losses and quoting around 7,480 levels as of 10:30 am. In comparison, the Nifty Defence index 200-DMA stands at 7,634.  The daily chart shows that at current levels, the Nifty Defence index was seen quoting below all its key moving averages. The short-term 20-DMA and 50-DMA stand at 8,012 and 8,045; while the medium-term 100-DMA stood at 7,956.  Technically, the 200-DMA is a widely used indicator in the stock market to identify long-term trends of the underlying index or stock. Indices or stocks trading consistently below this long-term average are considered to be in a downtrend, and vice versa.  Mehul Kothari, AVP & Technical Research analyst at Anand Rathi Shares and Stock Brokers reckons that the Nifty Defence index is likely to underperform as it quotes below the 200-DMA. 

 

  "The Defence sector shall remain under pressure in the near-term. However, cautions that there is no need to panic, as the Nifty Defence index has a considerably strong support around 7,300 levels," says Mehul Kothari.  The Nifty Defence index has shed nearly 7 per cent so far this month, and has plunged by nearly 20 per cent from its record high of 9,195 registered in June 2025.  In the short-term further downside seems unlikely as the index looks oversold on the daily chart. In the worst case scenario, the Nifty Defence index could plunge to 6,500 levels, adds Kothari.  Among individual stocks, the analyst flags Bharat Dynamics (BDL) and Bharat Electronics (BEL) as stocks looking fairly weak at the current juncture with possible downside risk of another 3 - 4 per cent.  The daily charts show that 13 out of the 18 Nifty Defence stocks were trading below their respective 200-DMAs including the likes of BDL, Hindustan Aeronautics (HAL), Mazagon Dock Shipbuilders and Solar Industries.  Meanwhile, analysts at B&K Securities (Batlivala & Karani Securities India Pvt Ltd) remain positive on the defence sector over the long-term owing to India's Aatmanirbhar Bharat mission, government's projected defence production of $36 billion by 2029 and favourable global factors in the aftermath of 'Operation Sindoor'.  B&K has re-initiated coverage on HAL and BEL with 'BUY' ratings and target price of ₹5,610 and ₹513. This implies a potential upside of 21.5 per cent and 32.5 per cent from current levels.  The brokerage firm also re-initiated coverage on BDL with 'HOLD' rating and a target price of ₹1,406. The stock at present trades roughly 1 per cent above B&K projected target price.  Disclaimer: The views expressed by the brokerage in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.