Defense stocks in focus after govt clears Rs 70,584 cr proposals, Are you holding any?

The shares of Hindustan Aeronautics Ltd. (HAL) increased by 4.7% to touch their near 52-week high of Rs 2,850 during the early hours of trading on Friday. This rise comes on the back of Defence Minister Rajnath Singh approving a large capital project worth Rs 70,584 crore to indigenously procure military hardware equipment. 

On Wednesday, the Defence Acquisition Council (DAC) under Rajnath Singh cleared proposals amid the three-year-long tensions with China in eastern Ladakh along the LoC. 

The armed forces will require multiple weapon systems such as 307 advanced towed artillery gun systems (ATAGS), 200 BrahMos supersonic cruise missiles, Shakti EW systems & Utility Helicopters, and more. 

The military capital expenditure announcements are in line with the ‘Atmanirbharta’ vision of the Union Government to develop indigenous defense capabilities and reduce dependence on imports. 

Furthermore, the FDI allowance for the defense sector was recently increased to 74% from 49% earlier to attract overseas defense manufacturers to India. 

This large proposal is the second major development in the last two weeks. Previously, the Defence Ministry signed two contracts worth Rs 9,900 crore to obtain training aircraft and ships from Hindustan Aeronautics Limited (HAL) and Larsen & Toubro Limited (L&T). 

Rajnath Singh’s office tweeted yesterday, “Such quantum of indigenous procurement will not only galvanize the Indian industries towards achieving the goal of ‘Aatmanirbhar Bharat’ (self-reliant India) but also reduce India’s dependency on foreign vendors to a large extent.” 

Various other defense stocks were also up during the first half of the trading session along with HAL. Bharat Electronics Ltd. (BEL) was up 3% to Rs 93.85 and Bharat Dynamics Ltd. (BDL) climbed 3% to Rs 925.90. 

Written by Vikalp Mishra

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