Nifty India Defence index surges 2% ahead of Union Budget; here's why

Unimech Aerospace and Manufacturing, Mtar Technologies and Data Patterns rallied in the range of 5 per cent to 6 per cent on the NSE in intra-day trade.

Nifty India Defence index movement today

 

Shares of defence related companies are in focus with Nifty India Defence index surging 2 per cent to 8,354.15 on the National Stock Exchange (NSE) in Sunday’s intra-day trade in otherwise a subdued market. The rise comes on expectation of an increase in spending, driven by geopolitical tensions, force modernisation, and indigenisation policy in the Union Budget 2026.

 

At 10:48 AM; Nifty India Defence index was up 1.6 per cent at 8,315.05, as compared to 0.17 per cent rise in the Nifty 50.

 

Unimech Aerospace and Manufacturing, Mtar Technologies and Data Patterns (India) were rallied in the range of 5 per cent to 6 per cent on the NSE in intra-day trade. Paras Defence and Space Technologies, Solar Industries, Bharat Electronics, Mazagon Dock Shipbuilders, Mishra Dhatu Nigam, Garden Reach Shipbuilders & Engineers and Hindustan Aeronautics (HAL) were up between 2 per cent and 3 per cent.

 

What’s driving defence stocks on Sunday?

 

Union Finance Minister Nirmala Sitharaman is set to present the Union Budget for the financial year 2026–27 (FY27) in the Lok Sabha on Sunday, February 01.

 

According to Choice Institutional Equities, 20 per cent year-on-year (YoY) spending increase expected, driven by geopolitical tensions, force modernisation, and indigenisation policy. The capex-heavy allocation mix continues, reinforcing structural shift from imports to domestic mfg. of long-cycle platforms, the brokerage firm said in Union Budget 2026 expectations.

 

Platform finalisation phase: Tejas Mk-2, QRSAM and MRSAM programs likely to receive execution approvals, provides multi-year revenue visibility, while naval pipeline gains momentum: Project-75 (I) submarines and follow-on orders to anchor long-duration capex cycle. The brokerages expected spend diversification towards systems, sub-systems and lifecycle components (avionics, sensors, EW, MRO & upgrades) to reduce episodic revenue dependence.

 

The brokerage firm has stock ideas of Bharat Electronics (target price ₹550), Bharat Dynamics (₹1,965) and Data Patterns India (₹3,300).

 

Bharat Electronics has an order book of approx. 3.1x FY25 revenue, providing strong near-term visibility. An additional order inflow of ₹30,000–32,000 crore for QRSAM is expected in near term, while Project KUSHA is anticipated to commence in FY28–29, further strengthening Bharat Electronics’ medium-term growth pipeline.

 

Bharat Dynamics has a strong order book of ~8x of FY25 revenue. Management has guided for additional order inflow of ₹ 20,000 crore by FY27. A strong order pipeline is in place including large orders such as QRSAM, Aakash-NG and MRSAM. 

 

Data Patterns has an order book of approximately 1.8x of FY25 revenue and a presence across India’s most prestigious platforms, including the BrahMos. Management has guided a strong pipeline of orders worth ₹ 2,000–3,000 crore in the short-to-medium term, supporting sustained growth visibility.

 

Meanwhile, operation Sindoor (India’s military operations against Pakistan) has led to revived expectations of a rise in defence spending, analysts said. "Defence capex-to-GDP had been falling from 0.7 per cent in FY21 to 0.5 per cent in FY26. The defence ministry has been requesting 20 per cent YoY growth in defence spending for FY27, and given the evolving geopolitical and security landscape," analysts at Ambit Capital said as they expect a rise in allocation to the defence sector.  ==============================  Disclaimer: View and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers discretion is advised.