Defence Stocks Surge: What's Driving The Rally In HAL And Bharat Dynamics?

The shares of defence majors extended their rally in the Indian stock market on Thursday, June 18, after solid buying momentum post the annual defence production surged by 15.6% from 1.54 lakh crore recorded in FY25.

The defence stock gains lifted the Nifty India Defence index by nearly 1%, after a sharp 4% surge in the last  session. The index has now surged for five consecutive trading sessions.

Among the top gainers on the Nifty India Defence index, Aequs and Zen Technologies jumped over 5% each.

The other gainers are Solar Industries India, Dynamatic Technologies, Astra Microwave Products, MTAR Technologies, Paras Defence and Space Technologies, and Bharat Electronics (BEL), which  recorded a surge between 1% and 3%.

Sharing the record growth in defence production on X, Defence Minister, Rajnath Singh said the country’s defence manufacturing figures represents a 110% rise as compared to FY21, when defence production stood at Rs 84,643 crore. 

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The rally was triggered by data released by the Ministry of Defence on Wednesday, which showed that India’s defence production reached an all-time high of ₹1.78 lakh crore in FY26.

"Indigenous defence production has increased nearly fourfold from Rs 43,746 crore in FY 2013–14," Singh noted.

India’s defence exports also recorded robust growth, surging 63% YoY to Rs 38,400 crore in FY26. The share of public sector defence companies in total defense exports improved to 55%, while historically, it was largely dominated by the private player's for the supply of sub-components.

The Nifty India Defence index has gained 8.85% in five sessions, while the index has jumped 23% on a year-to-date (YTD) basis.

Meanwhile, the performance of defence companies in FY26 remained strong, with healthy order inflows across the sector. Defence companies reported decent execution, with stronger-than-expected EBITDA margins and net profit outperforming expectations.