Indo-Pak Ceasefire: Can investors add defense stocks to their surveillance list for long-term investment?

Defense Stocks (May 12, 2025) traded after India and Pakistan agreed to a 90-hour upgrade after India and Pakistan agreed to an upgrade after India and Pakistan.

In the last count at 12:31 pm, the trading price of well-known figures such as Bharat Electronics and Bharat Dynamics rose by 1%, while Hindustan Airlines traded more than 1%.

Similarly, other rebutlers, such as Zen Technologies, Unimech Aerospace and Krishna Defence, traded up to 5%, while counters such as Paras Defense, Astra Microwave and Apollo Micro Systems fell 6%.

Beautiful defensive index history and performance

The Nifty Defense Index (launched in November 2024) outperformed wider indexes in the past month, such as the Nifty 50 and the Nifty Midcap 100, with 8% rises in Nifty and 18% growth since April 9, 2025.

Structural support for the defense sector

Octanom Tech and hedge Rahul Ghose said: “While the recent momentum may be driven by conflict-related sentiment, the real story is that, under the long-term structural drive of the Indigenous Defense Manufacturing under Atmanirbhar Bharat, the government has consistently worked to promote the promotion foundation for defense alternatives and promote competition among the public.

Key drivers:

Rising allocation of defense budget: In fiscal 25, India allocated INR 6.2 billion in defense, with only INR 1.72 billion only on capital expenditures. Given the current tensions, the allocation is expected to rise further.

Made in India Defence: Companies such as BEL and HAL are major beneficiaries of indigenous policies, providing a large number of domestic orders for radar, helicopters and avionics.

Export Opportunities: HAL and BDL indicate that exports are becoming increasingly attractive, especially in East Asia, Africa and Latin American countries.

Private sector participation: L&T Defense, Data Patterns and Bharat Forge actively expand their defense portfolio, which marks a shift in the advantages of traditional PSUs.

Technology and R&D: With DRDO-backed programs and government support, the company is investing more in Indigenous platforms and advanced systems, thereby improving future scalability.

So with India's truce with Pakistan now – can investors still look at defense stocks in the long run?

Dr Ravi Singh, Senior Vice President – Retail Research, Religious Broker said: “On May 9, trading in the overall market was negative amid rising tensions along the India-Pakistan border. However, in recent years, defence stocks have gained momentum. HAL and BEL are growing in the defense budgets of India and the Ministry of Defense.

Both stocks are fundamentally and technically powerful and seem to be a good addition to a long-term portfolio, he added.

Meanwhile, Dr. Vikas Gupta, CEO and chief investment strategist at Omniscience Capital, believes that the companies already have large order books and these books will become even bigger. Operation Sindoor may focus on the speed of implementation of defense companies. These companies may get aggressive execution goals that may start to become visible in a few quarters and 1-3 years, thereby increasing revenue and earnings forecasts.

Similarly, companies operating in other aspects, namely non-weapons and ammunition for defense, such as cybersecurity, strategic minerals and rare earths, oil and gas, water and gas, hydraulic projects, military EPC, military logistics and railways, may also see execution at a higher rate. However, investing in attractive valuations should be cautious, as well as valuations that pass scientific investment standards.

Major stocks that look attractive from a basic and technical perspective –

Hindustan Aeronautics Ltd. (HAL): HAL is a key player in the aircraft manufacturing industry, with strong orders (~INR 184,000 crore) and continuous production of Tejas Mk1a. Its joint venture with Safran for engine development also adds long-term potential. Technically, HAL has been corrected from the 5600 level to 3080 from February 25. The stocks are now traded at the level of 4500. It has formed a bullish engulfing pattern on the 20-month EMA, followed by a continuous monthly high. As valuations are still hovering at expensive levels, this is the best way to do it.

Bharat Dynamics Ltd (BDL): The main manufacturer of BDL pipelines is strong and has been further enhanced by recent partnerships with MBDA (Europe).

Technically, the stock fell almost 50% from its high in grade 1790 to nearly 900 shares and again gathered to 1500. The stock formed a pierced candlestick on the 20-month EMA on March 25. Any inclination (left and right) towards the lower end of the range can be considered a buying opportunity.

Dr Ravi Singh said HAL is currently trading at close to Rs 4,500 with upside potential of about 10-12% and downside risk limit of 5%.

Mazagon Dock Shipyard: Benefits from the modernization push of the Indian Navy, the PSU is building advanced submarines and stealth frigates under Project 75 and other contracts.

Technically, stocks in the defense sector are the strongest. It has a strong uptrend over the weekly, monthly and quarterly timeframes without large resistance overhead. Any callback to the 2480-2260 level should be considered a good opportunity to enter.

PARAS Defense: Paras Defence stands out for its specialized products in optoelectronics, space optics and defense electronic systems. It has carved a niche in high-precision components and is deeply integrated into India’s defense and space supply chains. The company has a strong order book, strong customer relationships with DRDO and ISRO and consistent revenue growth. Technically, the stock has formed a series of bullish candles on 20 EMA per month, providing further credibility with the fundamentally positive outlook. This convergence of technology and basic signals suggests strong investor confidence and potential upside potential in the medium term. Consider entering the stock around the current price

While there are many defense stocks that look positive in the industry, we focus specifically on those with strong fundamental prospects and positive technical structures.

Bharat Electronics: BEL's trading price is close to the strong resistance level of Rs 322; a breakout above this level may shift the price to Rs 350–362 with a downside risk limit of Rs 304.

in conclusion –

Defense stocks are no longer just event-driven trading. By 2026, India is ready to become the world's third largest defensive agent, so the industry offers a 5-7-year runway. As one senior fund manager noted: “In 1999, we bought defense shares for patriotism. In 2025, we bought defense shares at a profitable price.”

Although the consequences of Sindoor action may bring volatility, historical and policy consistency suggests that a decline is buying opportunities rather than an exit signal. Missiles may fly, but the market will continue to move forward.