Is peace bad for Indian defence stocks? HAL, Paras, Mazagon share performance today

Returns on defence stocks seem to be drying up. Comparing the 3.5 per cent loss in total returns with the benchmark NSE Nifty 50 index, month-on-month, the NSE Defence Index posted an 11.8 per cent loss in total returns.

Defence equities have been steadily falling for the past two months. Back in May, India launched Operation Sindoor against the terrorist hubs in Pakistan and Pakistan-occupied Kashmir, weeks after terrorists ambushed a tourist spot in Pahalgam and killed 26 people (mostly tourists) after verifying their religious identity.

The weeks that followed saw an uptick in defence stocks and increased investor activity. But the market has not been able to sustain similar momentum recently.

On August 8, the NSE’s Defence Index closed at 7,607.90, down 192.15 points. That was a 2.46 per cent dip. At the close of trading, NSE Nifty 50 shed over 232 points to settle at 24,363 while the Sensex lost more than 765 points to settle at 79,857.79 on Friday.

It seems as if peace returning to the region battered the defence stocks. Or it could be the latest announcement by PM Narendra Modi that India was exploring defence purchases with Brazil as an upgrade to the bilateral trade.

Moreover, Trump’s new tariffs have had an over-reaching effect on all sectors. Ironically, India and the US share healthy defence relations, including expanding defence trade, co-production, and joint military initiatives such as drills. The latest development was a new 10-year US-India Defence Framework agreement expected to be signed by the end of 2025.

However, the recent standoff between Modi and Trump could throw a wrench in the deal.

ALSO READ | India’s ties with Russia ‘time-tested’, should not be seen through the prism of a third country: MEA after Trump rhetoric

The biggest loser in Friday trade on the NSE Defence Index was Mazagon Dock Shipbuilders (MAZDOCK), down 5.39 per cent. Data Patterns India (DATAPATTNS) fell 4.93 per cent, in second place.

Bharat Dynamics (BDL) shaved off 4.78 per cent. DCX Systems (DCXINDIA) dropped by 4.75 per cent. Paras Defence and Space Technologies (PARAS) slumped 3.46 per cent.

Cochin Shipyard (COCHINSHIP) was down 3.05 per cent. Unimech Aerospace and Manufacturing (UNIMECH) was down 3.04 per cent. Solar Industries India (SOLARINDS) lost by 2.86 per cent.

Hindustan Aeronautics Limited (HAL) slid 2.45 per cent. Zen Technologies (ZENTEC) slipped 2.07 per cent. Those were the ten worst laggards on the NSE Defence Index on Friday.

Business