Indian defence stocks soared on Thursday, June 26, 2025, as global sentiment turned bullish following a major policy announcement by NATO leaders at the Hague Summit. The North Atlantic Treaty Organisation (NATO) pledged to significantly increase defence and security-related expenditure across its member countries, leading to speculation of a sharp rise in export opportunities for Indian defence manufacturers.

Key Defence Stocks Rally

Among the major gainers:

• Hindustan Aeronautics Ltd (HAL)

• Bharat Electronics Ltd (BEL)

• Bharat Dynamics Ltd (BDL)

• Paras Defence and Space Technologies

• Data Patterns (India)

• Astra Microwave Products

• Zen Technologies

• Ideaforge Technology

These stocks rallied up to 4% intraday, with Nifty India Defence index climbing 1.5%, reflecting the broad market enthusiasm around defence-sector-led growth.

The rally was largely driven by expectations that increased global defence budgets—especially from NATO countries—could translate into higher export demand for India’s cost-effective, technology-driven defence systems.

NATO’s New Spending Commitment

During the Hague Summit, NATO member countries reinforced their “ironclad commitment” to collective defence. A major highlight of the summit was the agreement to increase defence-related spending to 5% of GDP by 2035.

This includes:

• Minimum 3.5% allocation towards core defence capabilities (equipment, systems, R&D)

• Up to 1.5% for protection of critical infrastructure like cyber, satellite, and energy networks

This commitment is not just symbolic—it signals a massive pipeline of future contracts and procurements, which Indian defence firms can tap into through exports and joint ventures.

India’s Strategic Advantage in Global Defence Market

India’s rise as a trusted defence manufacturer aligns well with the needs of NATO countries, many of whom are seeking to diversify supply chains away from traditional suppliers like Russia and China. Indian companies offer:

• Competitive pricing

• Reliable quality

• Geopolitical neutrality

• Growing indigenous defence capability under “Make in India”

Firms like HAL, BEL, and BDL have already established export credentials, and newer players like Data Patterns, Zen Technologies, and Paras Defence are gaining visibility for their niche tech capabilities in areas like avionics, radar systems, drones, simulation, and space technologies.

Stock-Specific Updates and Outlook

HAL (Hindustan Aeronautics Ltd)

• Already a key player in aircraft and defence systems exports

• Recent orders from Southeast Asia and Latin American nations

• Potential benefit from NATO’s enhanced aviation-related procurements

BEL (Bharat Electronics Ltd)

• Strong presence in radar, communication, and electronic warfare

• Could see expanded opportunities in NATO’s infrastructure protection and digital warfare

BDL (Bharat Dynamics Ltd)

• Known for missile and strategic weapon systems

• Higher global defence spends may drive co-development agreements or exports

Paras Defence and Space

• Involved in optics, drones, and space defence technologies

• Well positioned to benefit from NATO’s space security budget expansion

Data Patterns & Astra Microwave

• Play crucial roles in sensors, electronics, and microwave systems

• Could become key suppliers for NATO-linked defence ecosystem

Ideaforge

• Known for cutting-edge UAVs and surveillance drones

• Poised to benefit from NATO’s increased spending on autonomous and border surveillance tech

Nifty India Defence Index and Market Sentiment

The Nifty India Defence index, which tracks top listed defence companies in India, jumped nearly 1.5%, signalling strong momentum in the space. Analysts believe this sector is entering a multi-year growth cycle, powered by both:

• Domestic defence modernization

• Rising global export demand

With defence allocations in India’s own Union Budget also set to rise, Indian companies are now competing on a global stage, especially in countries seeking cost-efficient and reliable suppliers.

Investor Perspective: How to Ride the Boom

With NATO opening the floodgates of capital towards defence spending, investors may want to look at the Indian defence segment as a long-term structural opportunity. Key strategies could include:

• Accumulating large-cap names like HAL and BEL for stable growth and strong fundamentals

• Exploring mid and small caps like Paras Defence, Data Patterns, and Ideaforge for higher risk-reward

• Keeping an eye on new export MoUs or defence pacts, as these can act as short-term triggers

Experts advise tracking:

• Quarterly earnings and order books

• Government announcements on defence exports

• Technological collaborations with NATO-aligned countries

Conclusion

The NATO defence budget hike has sparked fresh interest in India’s defence manufacturing ecosystem, with HAL, BEL, Paras Defence, and others witnessing strong investor demand. As member countries commit to spend up to 5% of GDP by 2035 on defence and infrastructure protection, India stands out as a natural export partner due to its technological innovation, geopolitical neutrality, and cost efficiency.

With increased funding, new orders, and global exposure, Indian defence stocks are entering a new era of strategic relevance and investment opportunity.

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The Current active IPO are Moving Media Entertainment, Valencia India, PRO FX Tech, Ace Alpha Tech, Indogulf Cropsciences, Suntech Infra Solutions, Rama Telecom, Supertech EV, Sambhav Steel Tubes, HDB Financials, Abram Food, Shri Hare-Krishna Sponge Iron, Icon Facilitators, Globe Civil Projects, Ellenbarrie Indutrial Gases, Kalpataru, AJC Jewel.

The Closed IPOs are Aakaar Medical Technologies, Safe Enterprises Retail Fixtures, Mayasheel Ventures.

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