Defence stocks jump up to 10% on hopes of securing Rs 30,000 crore order from DAC

Defense stocks in Tuesday’s trade have once again gained traction amid hopes of cracking an order worth Rs 30,000 crore from the Defence Acquisition Council or DAC. The order for Air to Missile is expected to be bagged for the Indian armed forces.

The Defence Acquisition Council is slated to meet in the 4th week of the ongoing month.

On the news, stocks from the defence pack surged up to 10 per cent. As at the last count at around 10:38 am, NIBE Ltd was up as much as 9.57 per cent, while others including the likes of Data Patterns, Astra Microwave Products and Hindustan Aeronautics among others were up between 2-4 per cent.

Avinash Gorakshakar, Head of Research at Profitmart Securities view on defence stocks

The expert held that the sentiment will be boosted in the case of this order boost.  Further, he added that even though stocks from the space have run up sharply and valuations have turned expensive, nonetheless,  with a visibility of 2-3 years, stocks like Bharat Electronics(BEL), Bharat Dynamics (BDL) and Hindustan Aeronautics (HAL) should be in focus. 

Further the analyst added that the missile order will mostly be secured by Bharat Dynamics. Additionally, he added that Data Patterms is also a play in the missile space.

So, investors if they add defence stocks to their portfolio currently, they should do it from a long-term view point.

This he iterated as he believes that in the short run the stocks can show sharp movement and valuations may appear on the higher side.