Defence stocks rose on Tuesday’s trades following an agreement between India and the US on a strategy for military-industrial cooperation during US Secretary of Defence Lloyd Austin’s recent visit to India.
Shares of Mazagon Dock Shipbuilders, Hindustan Aeronautics (HAL) and Bharat Dynamics hit fresh 52-week highs. Meanwhile, Bharat Electronics, Cochin Shipyard, Bharat Forge and MTAR Technologies were trading in the green.
The agreement will fast-track technology cooperation and co-production in areas including air combat and land mobility systems, the “undersea domain”, and intelligence, surveillance and reconnaissance, an AFP report said, quoting a statement issued by the US Defense Department.
Continuing their dream run, shares of Mazagon Dock Shipbuilders scaled past the ₹ 1,000 mark to reach a fresh 52-week high of ₹ 1062.00 on the exchanges. The stock witnessed uninterrupted gains during the past eight trading sessions, gaining nearly 40%.
Bharat Dynamics escalated to a 52-week high of ₹ 1,191.10 after it rallied for six consecutive sessions. Hindustan Aeronautics Ltd (HAL) climbed nearly 12% in the past four sessions to reach a fresh 52-week high of ₹ 3,408.00.
Reasons for the rise
Experts say that the defence sector looks well placed in terms of increasing domestic procurements by the government for our armed forces. With fewer imports, the danger of supply chain problems is also coming down in this industry.
Moreover, there has been a structural shift in the defence budget with increased allocation towards modernized indigenous platforms.
The recent budget announced an increasing domestic procurement budget share to 75 per cent for FY24 from 68 per cent for FY23. This will improve domestic procurement and directly benefit domestic companies, such as defence PSUs and private businesses, in terms of increased order inflows during the year. In fact, many companies already have a strong order book and a good number of orders in the pipeline.
Written By Simran Bafna
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