The broader market recovery is providing additional support for defence sector stocks, with Nifty's 5-day fall potentially nearing a reversal according to latest technical analysis. As per ETMarkets, the combination of price breakout, improving momentum, and expanding volumes suggests the ongoing upmove could have further legs. HAL offers an attractive risk-reward setup with upside potential towards 360 initially and 425 over the medium term, with traders maintaining a positive bias and stop-loss at 288 on a closing basis. The monthly MACD has generated a bullish signal crossover, highlighting improving long-term momentum and suggesting the possibility of a fresh upward leg.
As reported by The Financial Express, Harshit Patel, Director at Equirus Securities, believes HAL currently offers a more attractive risk-reward opportunity as many concerns have already been factored into the stock price. The primary challenge remains the Light Combat Aircraft (LCA) Mk1A programme, where HAL has not yet delivered a single aircraft due to pending integration work involving electronic warfare systems, avionics and weapon systems. Patel estimates deliveries may not start before Q4FY27, against the company's revised guidance of August-September 2026. However, once deliveries begin, production should ramp up quickly with 18 airframes ready and engine deliveries commenced, with GE committed to delivering 2 engines per month from 2027 onwards.
According to The Financial Express report, the next few years could mark a major turning point for HAL as several programmes move into execution simultaneously. FY28 and FY29 are expected to be inflection years for HAL, with several major programmes including Mk1A, Prachand, HTT-40 and Su-30 under simultaneous execution. Analysts estimate EBITDA growth of over 20% in both FY28 and FY29, even after factoring in lower margins from an adverse execution mix. The company's massive execution pipeline includes 180 LCA Mk1A, 120 LCA Mk2, the Su-30 MKI fleet upgrade, 106 HTT-40, 175 LCH Prachand and 400 IMRH among other programmes.
According to The Financial Express, technical analysts are closely tracking the recent correction in BEL to determine if it creates a buying opportunity. Jigar S. Patel, Senior Manager of Equity Technical Research at Anand Rathi Share and Stock Brokers, noted that BEL's charts are yet to show a convincing turnaround, trading below key moving averages and the Ichimoku Cloud. In contrast, HAL continues to maintain a positive medium-term trend, trading above the 20 EMA, 50 SMA, and Ichimoku Cloud, with the stock witnessing a gradual uptrend with higher highs and higher lows. The technical analysis suggests that while HAL offers higher upside optionality if execution normalizes, BEL provides better downside protection through earnings stability. Supporting the bullish view, momentum indicators have cooled from overbought levels, indicating that selling pressure may be losing steam, with nearly 40% of stock futures witnessing short covering on Friday.
