Defense Stocks: Defense Stocks on fire, will it continue even further? Know the expert – Defense stocks surge despite market fall experts warn of high Valuations after Operation Sindoor GRSE Cochin Shipyard Paras Defense

Defense stocks: The Indian stock market saw a huge decline on Thursday (May 22). The two major index i.e. Sensex and Nifty closed down by about 1%. However, the shares of the defense sector showed a strong rise. Nifty India Defense Index climbed more than 2%. This was the second consecutive day when this sector gave positive closing.

The most bounce in the GRSE

Garden Reach Shipbuilders and Engineers (GRSE) shared the most bounce. It closed at Rs 2,774.00 with a 10.94% gain. This is the highest level of GRSE last six months. The reason for this surge was the formation of the company’s lowest bidder in the Indian Navy’s Rs 25,000 crore project.

These defense stocks also rapidly seen

• Solar Industries: Growth of more than 6%
• Cochin Shipyard: Jump more than 4%
• Paras Defense and Mazagon Dock Shipbuilders: Right 3%
• Bharat Dynamics (BDL): About 2% above
• HAL and BEL: minor edge

Impact of PM Modi’s statement on Operation Sindoor

Prime Minister Narendra Modi on May 22 appreciated the success of Indian forces in ‘Operation Sindoor’ in Bikaner, Rajasthan.

He said, “Our government gave free hand to the three armies. They created such a cycle that Pakistan had to come to the knees … In response to the April 22 attack, we demolished the nine biggest bases of terrorists in 22 minutes.” The speech and success of Operation Sindoor has brought the defense sector again to the radar of investors.

Market experts opinion on defense stocks

Experts believe that the fundamentals of defense companies are strong, but need to be conscious about valuations. Ravi Singh, Senior Vice President of Religare Broking, said, “Defense and media were the two sectors which were closed in the gains today. Companies like HAL, BEL and GRSE gave better results than expected in the March quarter.”

He also added that defense sector is in structural growth mode due to increasing interest in government policies and defense experts. Shipbuilding companies, especially due to recent Navy projects, have emerged as leaders.

Warning on valuation

Pankaj Kumar, Vice President of Kotak Securities, warned about the valuation of the Defense Stocks. He said, “Defense companies’ shares are currently running on the sentiment, but the valuation is very high. This rally can be broken if there is less results than expected in any quarter.”

Research analyst Divyam Maur in Samco Securities also has more or less the same opinion. He said, “The tension between India and Pakistan has rejected the strategic importance of the defense sector … but the P/E multiples of many private companies have been stretched quite a lot.” They suggest that the long term outlook is strong, but it would be better to be selected and after correction.

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