Defence sector stocks surged on Tuesday, October 6, with the Nifty India Defence index gaining 1.61% to hit an intraday high of 9,328.45 points, significantly outperforming the previous session's decline. According to Moneycontrol, Bharat Electronics emerged as the biggest drag on the index with a contribution of -34.76%, while Hindustan Aeronautics provided the strongest support with a positive contribution of +19.57%. Other notable contributors to the index decline included MTAR Technologies (-8.43%), Solar Industries (-4.21%), Data Patterns (-2.26%), and Paras Defence (-1.03%). However, the latest session saw a complete turnaround with Mishra Dhatu Nigam leading gains at 5.8%, Paras Defence up 4.6%, and Astra Microwave Products rising 4.4%. HAL gained 2.8%, Bharat Forge advanced 2.6%, and Aequs Ltd surged 3.5% during the trading session.
The defence sector continues to benefit from unprecedented government approval activity that is significantly expanding opportunities for domestic players. As reported by Motilal Oswal Securities, the Defence segment has seen DAC approvals of ₹1.62 lakh crore in FY27 YTD with a healthy pipeline ahead. Total approvals of ₹13 lakh crore over FY25-YTD FY27 have helped expand the total addressable market for domestic defence companies. The brokerage notes that the government is opening missile production to Indian private players, reducing single-company dependency and supporting approval for DRDO to transfer technologies for all conventional missile systems to Indian industry for domestic production.
The Ministry of Defence signed a significant ₹661.50 crore contract with BrahMos Aerospace Private Limited on Tuesday, October 6, to procure BrahMos Fire Control System and Launchers for Indian Navy ships under the Buy (Indian-IDDM) Category. The deal was signed in New Delhi on Tuesday in the presence of Defence Secretary Rajesh Kumar Singh, according to the Press Information Bureau (PIB). The contract carries a minimum of 68% indigenous content with participation of several Indian industries including MSMEs. The ministry stated that the project encourages active participation by various Indian industries, including micro, small and medium enterprises (MSMEs), and will generate employment over a period of three years. The contract bolsters India's maritime security architecture and defence capabilities, described as a critical milestone in ongoing efforts to indigenise advanced military technology.
Several defence companies announced significant corporate developments that boosted investor sentiment. Bharat Forge disclosed securing a long-term contract with Pratt & Whitney Canada to supply mission-critical aerospace engine components, with manufacturing to be done at the firm's aerospace facility in India. Market experts predict that while growth, execution and margin normalisation risks remain, a strong pipeline of India's defence programs along with emergence of missiles and exports will add to the sector's tailwind in the medium term. The positive momentum combined with corporate actions adds to the improving sentiment among investors, while concerns still remain about fund outflows from the domestic market amid elevated crude oil prices and US Treasury yields.
Despite the recent market weakness, defence ordering was weak during 2QFY27, but Motilal Oswal expects it to pick up as approved AoNs worth ₹13 lakh crore over FY25-YTD FY27 reach the finalisation stage. On aircraft programmes, the deadline for submitting the RFP for the AMCA project has been shifted to October 30. HAL's MD has committed to delivering 10 Tejas Mk-1A by March 2027, supported by 10 F404-IN20 engines received till date, 12 more committed by GE Aerospace by December 2026, and 27 completed airframes. The brokerage identifies key monitorables including QRSAM (CCS clearance awaited), Akash-NG, P75I (CCS approval awaited), landing platform docks, next-gen corvettes and frigates, Mk1A deliveries, and AMCA announcements, especially on higher private participation.
