Defense stocks are back in focus amid rising geopolitical conflicts. With the US attacking Venezuela and capturing its President, Nicolas Maduro, and his wife, Cilia Flores, geopolitical scenarios are evolving rapidly.
Apart from the US-Venezuela conflict, President Donald Trump’s renewed Greenland annexation talks have witnessed sharp reactions even from the NATO bloc.
While Canadian Prime Minister Mark Carney has stated that his country will support Denmark’s sovereignty, EU countries such as France, Germany, Italy, Poland, Spain, and the United Kingdom have also stood in support of Greenland.
Defense stocks heat up
Several defense stocks, such as Solar Industries, MTAR Technologies, Bharat Dynamics (BDL), Bharat Electronics (BEL), and Hindustan Aeronautics (HAL), have jumped up to 8% this week so far in the wake of the US-Venezuela episode.
The narrative is building up in favor of defense stocks as experts believe that India cannot ignore these geopolitical developments, given its issues with China and Pakistan and would certainly increase its budget allocation to the sector.
Some experts believe that the US attack on Venezuela could be used as an opportunity by China to make a move on Taiwan.
“China might use the present uncertain and chaotic situation to make Taiwan move. That would aggravate the crisis in global geopolitics. Higher allocation for defense in the 2026 Budget is certain. This makes defense stocks a good buy. For defense companies, the challenge is in execution,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
Budget 2026: Defense could see increased outlay
Experts believe the Indian government will increase its defense outlay in Budget 2026, not only due to geopolitical factors but also as a result of its focus on indigenisation and reducing import dependence.
Ajit Mishra, SVP of Research at Religare Broking, emphasized that geopolitical risks have become an increasingly structural feature of the global landscape, underscoring the need for sustained defense preparedness. In this backdrop, India is expected to maintain steady defense budget allocations, largely insulated from short-term geopolitical developments.
Mishra added that this outlook is further reinforced by the government’s continued emphasis on “Make in India” and “Atmanirbhar Bharat”, aimed at enhancing indigenisation and reducing import dependence.
“Policy stability, improving execution capabilities, and a robust domestic order pipeline offer long-term earnings visibility for defense companies, positioning the sector as a structurally strong, long-term theme,” said Mishra.
Yellapu Santosh, a research analyst at Anand Rathi Institutional Equities, said that India’s defense trajectory is already upward, independent of global events. For India, drivers are, unresolved border tensions with China, accelerating naval competition in the Indian Ocean, and need to modernize the aging inventory.
“Given that some of the large programs are coming up for mass production, we expect the outlay to increase by double digits in the upcoming budget, with a rising share directed toward domestic procurement, electronics, missiles, drones, and sustainment,” said Santosh.
Defense stocks to buy
According to Mishra, investors with a long-term horizon can consider gradually accumulating defense stocks, with a preference for players that are well-positioned to scale up exports.
“From a short-term trading perspective, stocks such as BEL, Bharat Forge, MTAR Technologies, and Solar Industries appear promising,” said Mishra.
Prashanth Tapse, Senior VP (Research) at Mehta Equities, recommends HAL, Mishra Dhatu Nigam, BDL, Mazagon Dock Shipbuilders, and BEL for the short term.
Santosh said that defense stocks are no longer just a geopolitical hedge; they have become more of a multi-year industrial growth story in India.
He, however, added that investors should move away from ‘theme buying’ and focus on selectively buying the companies with strong execution visibility, distinctive edge, strong order book, and technological relevance.
“Within Indian defence, the most attractive opportunities lie in electronics, missiles, and platforms with export optionality. We remain optimistic about the growth prospects of HAL and Solar Industries. We have buy ratings on these two stocks,” said Santosh.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
