Defence stocks jumped on Tuesday’s trade after the Defence Acquisition Council (DAC) approved acquisition proposals worth around Rs 1.10 lakh crore for the Indian armed forces. 

Shares of Hindustan Aeronautics (HAL), Bharat Electronics (BEL), Astra Microwave Products, Paras Defence, BEML and other defence companies rose as much as 4%, with the Nifty India Defence Index also gaining around 1.3%.

The biggest trigger for the sector was the government’s focus on domestic procurement. Nearly 98% of the approved purchases will be sourced from Indian companies, strengthening the outlook for local defence manufacturers and suppliers. 

The approvals cover requirements of the Army, Navy and Air Force and could create a fresh pipeline of orders for companies across the defence manufacturing ecosystem.

For the Army, the approved requirements include CBRN reconnaissance vehicles, high-mobility vehicles, self-propelled mechanical mine layers, Advanced Light Helicopters, trawl tanks and the Sarvatra Bridge System. 

The Navy will receive indigenous Arudhra radars, while the government has also approved the design, development and procurement of marine gas turbines for warship propulsion.

The latest approval adds to a broader defence spending cycle that has been supporting Indian companies. Successful deployment of indigenous defence systems during Operation Sindoor has also improved the global visibility of Indian defence products, with brokerages expecting exports to grow strongly over the coming years.

The rally comes as investors expect higher domestic defence spending, faster order conversion and growing export opportunities to support earnings. However, investors should also track valuations and the pace at which approved proposals translate into actual orders.

At the time of the morning trade on September 8, HAL was up around 2% at Rs 4,943, while Astra Microwave gained more than 4% to Rs 1,783. BEL and other defence stocks were also trading higher.

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