Defence stocks fire up! Paras Defence, BEL, GRSE, other stocks surge up to 24% in 2 days. What’s powering the rally?

Shares of several defence companies, including Paras Defence and Bharat Electronics (BEL), extended their rally for a second straight session on Thursday, posting sharp gains despite a subdued broader market. Investor sentiment remained buoyant amid record defence production in FY26 and other sector-specific tailwinds.

Paras Defence shares rose 5% on Thursday to hit a fresh 52-week high of Rs 1,348.40 apiece on NSE. The stock has rallied 24% in just two sessions. Aequs shares also jumped over 5% today.

Garden Reach Shipbuilders & Engineers (GRSE) and Data Patterns (India) shares jumped 7-8% over two sessions, while those of Bharat Electronics (BEL), Cochin Shipyard, Hindustan Aeronautics (HAL), Mazagon Dock Shipbuilders, Bharat Dynamics (BDL), Zen Tech, Solar Industries India and Dynamatic Tech gained 4-6%. Astra Microwave Products and Mtar Tech shares rallied up to 11% over two sessions. The sharp rally pushed the Nifty India Defence index up around 5% over two days to 9,568 on Thursday.

The Ministry of Defence on Wednesday said that India’s indigenous defence production has soared to Rs 1.78 lakh crore in FY26, marking 15.6% growth from the Rs 1.54 lakh crore reported in the previous financial year. This also marks a 110% increase from the Rs 84,643 crore reported in FY21.

PSUs accounted for nearly 76% of the total production, while the private sector’s contribution rose 24% to record Rs 42,000 crore in FY26, from 22% in the financial year 2025.

Also read: Defence production up 15%; private sector share climbs to 24%

“The growth in defence production over the years has tremendously contributed to achieving the record defence exports of Rs 38,424 crore in FY 2025-26. The achievement reflects the growing momentum of the Government’s push for self-reliance in defence manufacturing under the Aatmanirbhar Bharat initiative, spearheaded by Prime Minister Shri Narendra Modi,” the ministry said in a statement.

The ministry also took to X to share that India is building one of the world’s strongest security architectures – from the world’s largest border guarding force and extensive border fencing to Sudarshan Chakra, stronger counter-terror capabilities and rapid growth in indigenous defence manufacturing.

Defence Minister Rajnath Singh said India has witnessed a historic transformation in its national security architecture under Prime Minister Narendra Modi’s leadership. “From a policy of zero tolerance against terrorism to decisive actions such as Surgical Strikes, Balakot and Operation Sindoor, India has sent a clear message that its sovereignty is non-negotiable,” he wrote in a post on X.

Also read: Trump backs India-US defence ties; says ‘if they’re attacked, we’ll help them’

Singh further noted that the government’s resolve for ‘Aatmanirbharta’, or self-reliance, in defence has strengthened indigenous capabilities, modernised the armed forces and enhanced preparedness across land, sea, air, cyber and space domains. “The journey of the last 12 years reflects a stronger, safer, self-reliant and more confident India, ready to safeguard its national interests and emerge as a leading global power,” he added.

Also read: Financials in a sweet spot, defence remains a structural bet, says Dharmesh Kant

What’s ahead for defence stocks?

“We have been bullish on the Indian defence sector, as we were clear that our armed forces, consisting of all three services, had to up their spends in order to be technologically up-to-date,” said Dinshaw Irani, chief executive of Helios Capital India.

He added that after the Ukraine war, the NATO countries also decided to increase their spending. “We were further convinced that India, being a friendly and peace-loving country with a low-cost base, will become a sourcing base for defence products. Small beginnings have been made, and the future holds a fair bit of promise,” according to the analyst.

Also read: Defence shares gain momentum on strong production and growth outlook

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