Kolkata: While geopolitical tension is not conducive to overall investor sentiment, analysts think the focus can swivel on defence stocks which could face an upward pressure on demand following India’s strike back on the terror sites in PoK (Pakistan occupied Kashmir) two weeks after the dastardly terror attack in Pahalgam that killed 25 tourists and one local. India’s firm response to the terror strikes after the Pahalgam attack on April 22 that included suspension of the Indus Waters Treaty and ban on all trade with Pakistan.
“While the escalation of conflict across the border is not likely to have a positive impact on overall investor sentiment, one can think of a tactical allocation in defence stocks. We all know that defence stocks had a remarkable run in 2024 and then suffered a decline. However, they have started rising again and this rising tension can pump up their demand again. It is pertinent to mention that HDF Defence Fund has sill not resumed accepting investment despite rising queries from investors,” director Wishlist Capital and investment strategist for more than 20 years, Nilanjan Dey, told News9live.com.
Major defence stocks to watch out for
As trading begins on Wednesday, May 7, apart from Sensex 30 and Nifty 50 and other indices, focus will be on major defence stocks such as Hindustan Aeronautics (HAL), Bharat Electronics (BEL), Bharat Dynamics Limited (BDL), Mazagon Dock Shipbuilders (MDSL), Cochin Shipyard (CSL), Garden Reach Shipbuilders & Engineers (GRSE), BEML, Astra Microwave Products, Data Patterns (India), Paras Defence and Space Technologies (PARAS), Sika Interplant Systems, Taneja Aerospace and Aviation, Bharat Forge, Zen Technologies, Larsen & Toubro (L&T) etc. Most of these stocks ended lower on Tuesday’s (May 6) trade.
Incidentally, HDFC Defence Fund which has suspended taking investments is the only active defence fund in India. There are other defence index funds however. According to reports, HDFC Defence fund discontinued taking SIPs from July 22, 2024. Dey told Newslive.com that investor queries about HDFC Defence funds have started pouring in since tension began building up between India and Pakistan following the Pahalgam attack.
War preparedness high
Over the past few days, Pakistan put its military on high alert. Islamabad also issued several naval warnings and closed the country’s airspace to India. At the same time, on the ground there are has been a continuous firing across the border. A factor that can drive investor sentiment in defence stocks is the growing perception that the government will tilt more and more on manufacturing of defence equipment under the ‘Atamnirbhar Bharat’ programme as the need for heightened military preparedness rises.
(Disclaimer: This article is only meant to provide information. News9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds, precious metals, commodity, any form of alternative investment instruments and crypto assets.)
While the escalation of geopolitical tension between India and Pakistan is expected to have a negative investor sentiment on Wednesday, the focus can be on defence stocks and whether the demand for these stocks rise. Markets Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
