Paras Defence, HAL, BDL Surge Amid India-Pakistan Tensions And Rafale Deal Progress

Indian defence stocks surged sharply in Monday's session, with names like Paras Defence, Bharat Dynamics (BDL), Cochin Shipyard, and Hindustan Aeronautics (HAL) rallying between 5% and 7%. 

The rally comes amid heightened geopolitical tensions between India and Pakistan. Following the Pahalgam terror attack, the Line of Control (LoC) witnessed multiple ceasefire violations over the weekend, keeping security concerns high. 

Investors are closely watching Defence Minister Rajnath Singh's meeting with Prime Minister Narendra Modi slated today.

During U.S. Vice President J.D. Vance's visit to India earlier this month, he advocated for stronger U.S.-India relations in the defense and energy sectors.  He suggested that India should purchase more American defense equipment, including Lockheed Martin's F-35 fighter jets. 

Additionally, Vance mentioned that the two countries would collaborate in manufacturing defense equipment, which is expected to enhance India's manufacturing capacity and self-reliance.

Meanwhile, India and France are set to formally conclude a major defence deal for 26 Rafale-M fighter jets on Monday, valued at nearly ₹63,000 crore. This high-profile deal reinforces India's focus on strengthening its defence capabilities through strategic partnerships.

Another long-term tailwind is the government's broader push towards defence indigenisation under the 'Make in India' initiative. These policy efforts are expected to keep the sector in focus.

In fact, last week, brokerage firm Nuvama initiated coverage on HAL, BDL, and Data Patterns, maintaining a bullish outlook and projecting up to 22% upside for these defence stocks.

Select defence stocks have seen a stellar run this year. BDL shares gained 33% year-to-date (YTD), Mazgaon Dock shares gained 25% while smaller names like Paras Defence shares surged 12% YTD. 

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