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Informist, Friday, May 30, 2025

MUMBAI – Defence-related stocks are expected to hold on to their recent gains in the light of structural tailwainds seen for the sector in the near term, the research head of a domestic brokerage said. Amid a steady rise in India's defence exports in the past few quarters and the Centre's push towards indegenisation through various schemes, order books of companies in the sector are expected to grow at a healthy pace.

However, timely execution of orders will be key and companies are expected to improve on this parameter, the analyst said. He does not see any major event next week that may lead to a sharp fall in stocks in the defence sector.

The Nifty India Defence Index fell slightly Friday after rising for seven straight sessions. The index had closed Thursday at its highest level yet, 8787.45 points, gaining over 20% in a month. This was despite a section of the market lamenting expensive valuations of several stocks in the sector. This week, Bharat Electronics, Astra Microwave Products, Garden Reach Shipbuilders & Engineers, and Solar Industries touched their respective lifetime highs after Defence Minister Rajnath Singh approved the advanced medium combat aircraft programme execution model.

The demand environment for companies in the power and electrical equipment sectors also remains conducive though an early monsoon may limit their gains, according to analysts. However, with renewable energy failing to keep pace with rising demand, investors anticipate a growth in top line for traditional power companies in the sector.

With public capital expenditure concentrated in select areas such as defence and railways, the capital goods sector will need a renewed boost which must come from the private sector, the reasearch head said. He expects capital expenditure in the private sector to pick up with softer interest rates starting with the next rate-cut decision of the Monetary Policy Committee of the Reserve Bank of India, due Jun. 6.

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Following are the resistance and support levels for the stocks for next week as per calculations based on their prices on the National Stock Exchange:

End

Reported by Shakshi Jain

Edited by Rajeev Pai

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