Defence stocks rally up to 6% after government clears arms procurement proposals worth Rs 28,732 crore

Defence companies’ shares surged up to 6 per cent on the BSE intraday on Wednesday as the Defence Acquisition Council (DAC), headed by Defence Minister Rajnath Singh, approved arms procurement proposals worth Rs 28,732 crore. 

Individually, Mishra Dhatu Nigam surged most of all, up by nearly 6 per cent to Rs 179 per share, followed by Bharat Dynamics and Garden Reach Shipbuilders, each up around 4 per cent to Rs 729.3 and Rs 254.65 per share, respectively, on the BSE intraday. 

While Paras Defence & Space Technologies and Hindustan Aeronautics each jumped around 3 per cent to Rs 617.55 and Rs 1933 per share, respectively, and Astra Microwave Products gained almost 2 per cent to Rs 278.35 per share on the BSE intraday. 

The Defence Ministry on July 26 approved the procurement of military equipment and weapons, which included swarm drones, carbines and bulletproof jackets, an official press statement said. 

"This is set to provide a major impetus to the small arms manufacturing industry in India and enhancing AtmaNirbharta [self-reliance] in small arms," the Ministry said. 

"Considering the demand of enhanced protection against the threat of enemy snipers to our troops deployed along the Line of Control, and in close combat operations in counter-terrorism scenario, the DAC accorded AoN for bulletproof jackets with Indian Standard BIS VI level of protection," it said. 

The approval of the new procurement proposals came on the backdrop of India's border row with China in eastern Ladakh. 

Amid rising demand for indigenisation, the defence sector outlook is seen as positive, domestic brokerage house ICICI Securities noted in its report while citing the triggers around the sector. The brokerage sees an upside of around 39 per cent in the defence sector stocks from current levels.  

Among favourite picks, the brokerage picks Hindustan Aeronautics, Mishra Dhatu Nigam, Mazagaon Dock and Astra Microwave.