Indian defence stocks surged up to 9% on March 4, 2025, tracking strong gains in European defence companies after US President Donald Trump’s recent comments on European security guarantees. The rally comes amid rising global defence spending and India’s growing emphasis on self-reliance in military production.

Top Gainers in the Indian Defence Sector

Among the key gainers in India’s defence sector:

• Garden Reach Shipbuilders & Engineers (GRSE) surged 9.61% to ₹1,331.05 per share on the NSE, snapping a four-day losing streak.
• Hindustan Aeronautics Ltd (HAL) climbed 4.49% to ₹3,330 per share, reflecting renewed investor confidence.
• Mazagon Dock Shipbuilders gained 5.52%, while Cochin Shipyard jumped 7.4%, benefiting from a strong outlook in defence shipbuilding.
• Bharat Electronics and Paras Defence & Space Technologies added up to 3% in intraday trade.

European Defence Rally Boosts Indian Sentiment

The sharp gains in Indian defence stocks were mirrored by a significant rally in European defence companies, driven by geopolitical uncertainty and an expected increase in military budgets across Europe:

• Germany’s Rheinmetall surged 15%, Italy’s Leonardo rose 17.3%, and France’s Thales climbed 16.7%.
• UK-based BAE Systems gained 14.3%, while Sweden’s Saab advanced 11.6%.
• The Stoxx Europe Aerospace & Defence Index jumped 8%, marking its biggest single-day rise since November 2020.

This surge came after Trump’s statements suggesting a reduced US commitment to European defence, prompting European nations to rethink their military strategies and funding priorities.

India’s Defence Sector Growth Plans

Back in India, the government is actively working towards expanding indigenous defence capabilities. On March 3, 2025, the Empowered Committee for Capability Enhancement of the Indian Air Force (IAF) submitted a key report to Defence Minister Rajnath Singh.

The report recommended:

• Strengthening India’s defence manufacturing sector through indigenisation.
• Enhancing private sector participation to improve efficiency and capacity.
• Modernising the Indian Air Force with new technologies and local production.

These initiatives align with India’s Atmanirbhar Bharat (self-reliant India) vision, aimed at reducing defence imports and boosting local defence production.

Market Experts See Long-Term Growth Potential

According to analysts, rising global defence budgets, geopolitical uncertainties, and India's push for self-sufficiency in defence manufacturing are key factors supporting long-term growth in the sector.

• The Indian government’s increased defence spending has led to strong order books for domestic defence firms like HAL, Mazagon Dock, and BEL.
• Private players such as Paras Defence and Bharat Forge are also expected to benefit from new defence contracts and export opportunities.
• With Europe increasing its defence funding, Indian companies could see potential export orders in the future.

Investor Outlook: Will the Rally Sustain?

While the immediate rally in defence stocks was driven by global sentiment and geopolitical shifts, experts believe that India’s long-term focus on self-reliance in defence will continue to attract investor interest.

With government-backed policies, rising defence budgets, and strategic global partnerships, Indian defence companies are expected to remain strong players in the sector.

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