The Indian stock market is witnessing remarkable momentum, especially in the defense sector, following the government’s recent approval of military hardware acquisitions worth over ₹54,000 crore. Shares of defense companies such as Bharat Dynamics Limited (BDL) and Bharat Electronics Limited (BEL) surged in response, reflecting growing investor confidence.
On March 20, 2025, the BSE Sensex recorded a significant increase, reclaiming the 76,000 level as investors grew hopeful amidst a backdrop of meaningful corporate developments. Bharat Dynamics shares surged by 5.63%, reaching ₹1,317, while BEML shares rose by 4.83% to ₹2,877.70. Similarly, DCX Systems saw a rise of 5%, hitting ₹251.40.
The Defence Acquisition Council (DAC) has played a pivotal role in this market rally, approving eight key acquisition proposals aimed at modernizing India’s military capabilities. Among these proposals is an order for upgrading the engines of T-90 tanks from a current power of 1,000 HP to a more robust 1,350 HP engine, enhancing mobility on the battlefield, particularly in high-altitude regions. The market was especially buoyed by the inclusion of advanced systems such as Airborne Early Warning and Control (AEW&C) aircraft, which are set to enhance the operational readiness of the Indian Air Force.
These acquisitions were confirmed during a DAC meeting, which highlighted the importance of bolstering indigenous military manufacturing as per the Defence Procurement Policy (DPP) 2020. The total value of the approved procurement stands at ₹2.2 lakh crore, marking a significant increase in domestic procurement, which has jumped from 54% in FY19 to 75% in recent years.
Furthermore, the move to approve locally manufactured weapons, such as the Varunastra torpedoes designed for the Navy, showcases India's intent to become more self-sufficient in defense. This trend is expected to resonate positively within the market, particularly for defense stocks like Bharat Dynamics and others noted in recent analyses by Antique Stock Broking, which has projected favorable targets for these stocks.
As part of the broader economic landscape, the Indian stock market has surged, adding ₹17.43 lakh crore in market capitalization over the past four days, with the Sensex on a roll, reflecting optimism around corporate earnings amid significant policy shifts. The implications of these policies are evident with companies like Bajaj Finance announcing leadership changes that aim to drive growth.
A notable shift occurred with the announcement of Bain Capital's potential acquisition of a major stake in Manappuram Finance, valued at over $1 billion. Additionally, TVS Motor Company’s announcement of a ₹10 per share dividend illustrates a positive momentum within the automotive sector, further indicating a diverse array of investor interests across various industries.
Meanwhile, Glenmark Pharmaceuticals received crucial FDA approval for Olopatadine Hydrochloride, which stands to benefit the company financially going forward. At the same time, CG Power has expanded its portfolio with new consumer durables, responding to a competitive market environment.
This is a time of both opportunity and transformation for Indian companies, particularly in the defense sector, following significant cabinet approvals streamlining procurement processes. Today, the cabinet approved defense orders totaling ₹7,000 crore, expected to significantly benefit Bharat Forge, which is anticipated to receive around ₹4,200 crore worth of contracts, primarily for artillery projects. Reportedly, the government is on the verge of granting an additional ₹20,000 crore in future defense contracts, with purchases planned for missiles and advanced military tech.
As market indices continue to near anticipated highs, the defense sector's booming performance has caught the attention of international investors. European countries are now increasingly looking to engage with Indian firms following the heightened demand for defense products due to geopolitical tensions worldwide.
The defense sector's outlook is robust, with a target of achieving ₹50,000 crore in defense exports by 2029, and the ambition to increase domestic defense production to ₹3 lakh crore. This ambition reflects an overarching plan to position India as a key player in global defense manufacturing.
In conclusion, the current dynamics in India’s defense sector, coupled with improved market confidence, present numerous opportunities for growth and investment. Companies across various industries are adapting strategies to align with these developments, making this a critical moment for stakeholders in the Indian financial marketplace.
