Defence Stocks Decline Up to 8% Amid Bharat Dynamics, Aequs, and Axiscades Developments

Defence Stocks Tumble Amid Profit-Taking and Weak Sentiment

On Friday, 29 May, the Nifty India Defence index, which represents the defence sector in the Indian stock market, plummeted by as much as 1.3% in intraday deals. This decline was largely driven by up to an 8% drop in its constituent stocks, with 15 stocks trading lower and four trading higher. The weak sentiment in the sector was evident in the stock-specific action following the March quarter results and profit-taking after a sharp rally.

The Nifty India Defence index touched an intraday low of 9,124.85 on Friday, compared to its Wednesday close of 9,253.75. Despite this decline, the defence index remains one of the best-performing indices this year, with a year-to-date gain of over 18%. This growth is attributed to factors such as the government's massive export push, high capital expenditure by companies, robust order pipelines, and strong demand due to ongoing military conflicts.

Data from Trendlyne reveals that the defence index has gained 18% on a year-to-date basis, with a 19% increase in 2025 and an 8.6% gain in 2024, the year of its inception. This heightened investor interest in the sector is driven by the government's initiatives, including indigenisation, higher domestic procurement, export optionality, and multi-year visibility in government orders.

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However, experts believe that the market has already factored in a large part of this narrative, and the risk has shifted from order inflow to execution. Harshal Dasani, Business Head at INVasset PMS, notes that the next leg of the rally in defence stocks will not come from order-book size alone, but from companies that can convert visibility into earnings and free cash flow.

The table above shows the top defence losers on Friday, with Bharat Dynamics leading the decline following a disappointing set of earnings for the March quarter of financial year 2025-26 (FY26). Motilal Oswal downgraded the stock to 'neutral' due to weaker execution and margin contraction.

Anshul Jain, Head of Research at Lakshmishree, observes that the Nifty Defence Index is approaching a crucial technical inflection point, trading just below the neckline of a 241-day cup-and-handle formation near 9210. He believes that a decisive breach and sustained close above 9210 would confirm the pattern and trigger fresh momentum buying across the defence basket, projecting an immediate upside toward the 10,200 zone.

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On the other hand, some defence stocks rose, with GRSE, Data Patterns, Mazagon Dock, and Dynamatic Technologies recording up to 5% upside.