Indian defence companies have recently seen a surge in work orders, driven by increased government contracts and higher defence spending. Stocks such as HAL, BEL, and Mazagon Dock Shipbuilders Ltd have notably gained traction in 2024.
Over the past two years, the country’s defence exports have grown significantly. In the next five years, India hopes to sell military gear valued at US$ 5 billion (about Rs. 35,000 crore). India’s 2023 defence budget is projected to be around $74 billion, with a compound annual growth rate (CAGR) of more than 4% through 2024–2028.
According to a Nomura report on the defence sector, India’s defence expenditure has grown by 10% over the past decade, significantly outpacing the global average of 3%.
The government aims to support Indigenous manufacturing and achieve self-sufficiency, supporting these goals through policy reforms and annual increases in defence capital expenditure.
Moreover, India’s defence exports have risen sharply from Rs.686 crore in 2013-14 to Rs.21,083 crore this year. To facilitate tracking of defence stocks, NSE has introduced the Nifty India Defence Index, comprising companies engaged in defence-related activities listed on the National Stock Exchange (NSE).
The Nifty India Defence Index was launched on April 2, 2018, starting with a base value of 1000. It tracks the collective performance of publicly listed companies operating within the Indian defence sector.
Nifty defence index comprising 15 companies that are also part of the Nifty Total Market Index, the Nifty India Defence Index is heavily concentrated, with the top 10 companies constituting approximately 94% of its total portfolio.
Stock weights in the defence index are determined by their free-float market capitalization, with individual stock weights capped at 20%.
In the past 12 months, the Nifty India Defence Index has achieved a compounded annual growth rate (CAGR) of 205%, and it has also gained 192% during this period. In contrast, the Nifty 50 has shown a 26% gain over the same period, highlighting that the Nifty India Defence Index has significantly outperformed the Nifty 50 benchmark in 2024.
The top 10 stocks that make up the majority of the defence index include..
| Company’s Name | Current Market Price(₹) | Weight(%) |
| Bharat Electronics Ltd | 336.50 | 19.66 |
| Hindustan Aeronautics Ltd. | 5,519 | 19.50 |
| Solar Industries India Ltd. | 13,134 | 14.03 |
| Cochin Shipyard Ltd. | 2,799 | 9.02 |
| Bharat Dynamics Ltd | 1,635 | 8.39 |
| Mazagoan Dock Shipbuilders Ltd | 5,455 | 7.42 |
| Data Patterns (India) Ltd. | 5.203,229 | 3,229 |
| Astra Microwave Products Ltd. Ltd | 920 | 4.60 |
| Garden Reach Shipbuilders & Engineers | 3.58 | 2,541 |
| Zen Technologies Ltd | 2.49 | 1,341 |
The Nifty Defence Index serves multiple purposes, such as benchmarking and supporting the creation of index funds, ETFs, and structured products. Additionally, there is a variant called the Nifty India Defence Total Returns Index.
Written by Omkar Chitnis
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