Defense stocks in India traded mostly lower on Friday, with the Nifty India Defense index declining nearly 1%, in line with weakness across the broader market.
Unimech Aerospace and Manufacturing emerged as the top loser in the index, plunging nearly 10%. Mishra Dhatu Nigam, Zen Technologies, Astra Microwave Products, Garden Reach Shipbuilders & Engineers, and Dynamatic Technologies, were other laggards, falling in the range of 2–4%.
On the positive side, Hindustan Aeronautics (HAL), Bharat Forge, and MTAR Technologies were the only constituents to trade in the green.
The decline in defense stocks came amid a broader stock market crash, with the benchmark indices Sensex and Nifty 50 dropping more than 1% each.
Despite the near-term pressure, defense stocks remain in focus following a significant development on the policy front. The Defense Acquisition Council (DAC), chaired by Defense Minister Rajnath Singh, approved capital acquisition proposals worth ₹3.60 lakh crore to address key requirements of the Indian Air Force (IAF), Indian Army, Indian Navy, and Indian Coast Guard.
The ‘Acceptance of Necessity’ (AoN) was granted for the procurement of 114 Rafale fighter jets, combat missiles, Air-Ship Based High Altitude Pseudo Satellite (AS-HAPS) systems, P-8I aircraft, Vibhav anti-tank mines, among other platforms.
The proposal envisages manufacturing a majority of the Multi-Role Fighter Aircraft (MRFA) contract in India, which analysts expect to significantly benefit the domestic defense ecosystem through localization, technology transfer, and supply chain participation.
The defense budget for FY26-27 has been pegged at ₹7.8 lakh crore, accounting for 15% of the Union Budget, marking a 15% YoY increase over 2025-26BE. Of this, ₹2.19 lakh crore is allocated for capital acquisitions.
Defense Stocks to buy
With project approvals worth ₹6.9 lakh crore in FY26 YTD, Antique Stock Broking believes defense companies have strong growth opportunities in the foreseeable timeframe. Hence, it maintained a ‘Buy’ rating on Mazagon Dock Shipbuilders, Hindustan Aeronautics (HAL), Bharat Electronics (BEL), Bharat Dynamics (BDL), Zen Technologies, Solar Industries, and PTC Industries.
Defense Sector Outlook
Mohit Gulati, CIO and Managing Partner of ITI Growth Opportunities Fund believes that the Indian defense sector entered 2026-27 with a positive outlook, but the path ahead is filled with unmet expectations. The government has been generous with promises: emergency procurement rules have been used five times in five years, large letters of intent (LOIs) have been offered, and Aatmanirbhar Bharat has provided political support.
“However, actual payments in the last two quarters did not materialize. LOIs do not equal revenue, and good intentions do not make a financial statement. The future of the sector depends solely on one factor in 2026-27: whether the government honors its contractual commitments or lets bureaucratic issues derail its political goals. The opportunity is real, the order book is full, but until actual payments are made, investors are left relying. on promises,” said Gulati.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
