Defence stocks outperform in weak market; BEL, Astra rally 5%; here's why

At 09:22 AM on Monday, the Nifty Defence index rose 1.1 per cent, as compared to 1 per cent decline in the Nifty 50 amid rising US-Iran tensions.

Nifty India Defence index

 

Shares of defence companies were trading firm and outperforming an otherwise weak market on Monday following the West Asia tensions.

 

Astra Microwave Products and Paras Defence and Space Technologies rallied 5 per cent each on the NSE in Monday’s intra-day trade. Bharat Dynamics, Data Patterns India and MTAR Technologies were up 3 per cent each, Mazagon Dock Shipbuilders, Zen Technologies, Garden Reach Shipbuilding, Solar Industries and Bharat Electronics (BEL) were up 2 per cent each.

 

At 09:22 AM; the Nifty Defence index was up 1.1 per cent, as compared to 1 per cent decline in the Nifty 50.

 

 

Why are defence stocks outperforming the market on Monday?

 

Indian benchmark indices were trading sharply lower, tracking losses in global equities as the US-Iran tension escalated.  The uncertainty related to the war in West Asia will loom large over the market in the near-term. 

 

The coordinated US–Israel strikes on Iran mark a sharp escalation in Middle East tensions, shifting the situation from limited hostilities to active military exchange after Iran retaliated with missile and drone attacks on the US bases.

 

Upstream energy and defence may see relative support, according to analysts at JM Financial Institutional Equities. Upstream oil producers such as Oil and Natural Gas Corporation (ONGC) and Oil India may benefit from stronger realisations, while defence names including Hindustan Aeronautics (HAL) and BEL could see sentiment support.

 

Additionally, the government’s growing capital budget allocation and continued focus on increasing India’s defence product manufacturing capability are expected to support the order inflow for defence companies in the medium- to long-term. The government of India’s focus on increasing indigenous procurement under ‘Atmanirbhar Bharat’ initiative provides a unique opportunity for the sector to build its future revenue streams through development of domestic capabilities. 

 

BEL’s unexecuted order book as on January 01, 2026, stood at ₹73,015 crore. This translates into an order book to order inflow ratio of around 3.2 times (based on FY2025 operating revenue), providing adequate medium-term revenue visibility. Additionally, the Government’s growing capital budget allocation and continued focus on increasing India’s defence product manufacturing capability are expected to support the order inflow for BEL in the medium to long term, according to ICRA.

 

Meanwhile, Astra Microwave Products (AMPL) has received in-principle board approval to explore the demerger of its Space, Meteorology and Hydrology business into a separate entity (Astra Space Technologies - ASTPL), resulting in two independently listed companies with mirror shareholding. Post restructuring, AMPL will function as a pure-play Defence & Aerospace company, while ASTPL will house the other verticals. Company aims to complete the demerger and list ASTPL by Q1FY28, subject to the timely receipt of all approvals. 

 

The demerger will enable company to focus on both the key segments (Defence and Space) separately with better capital allocation and target segment specific growth opportunities in the coming period. Defence contributes 72 per cent of current order book while remaining share from Space & others. The move structurally creates two specialised platforms — one strengthening India’s defence electronics ecosystem and the other expanding indigenous space hardware and satellite capabilities positioning both to capitalise on rising domestic and global demand, ICICI Securities said in a note.  ==================================  Disclaimer: View and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers discretion is advised.