The defence stocks in India have fallen up to 7% since the ceasefire was announced in West Asia earlier this week. The share price of Garden Reach Shipbuilders & Engineers lost 5.5% and the large-cap defence stock Bharat Dynamics corrected 3.6% in the past week.
That apart, the stock price of Mtar Technologies has fallen almost 7% in the last five trading sessions on the news of the ceasefire, the most among the list of defence stocks. It was followed by DCX Systems, which fell by over 6% during the same time frame. There were stocks as well that declined.’
NATO raises defence spending
However, some defence stocks pocketed gains after NATO raised the defence spending. Cyient DLM has given a return of 5.2%. The share price of BEML has risen 3.74% in the last one week.
The US President Donald Trump insisted that NATO members reach the 5% level instead of 2% baseline level required by the alliance. However, only a few allies, like Poland and the Baltic states, are coming close to 5% at the moment. The US itself is under 3.4% in 2024.
NATO’s 32 member countries have reached a consensus agreement to dedicate 3.5% to core military needs by 2035, and 1.5% to broader “defence-related” areas such as cybersecurity and infrastructure.
Iran-Israel conflict
The ceasefire in West Asia seemed to be holding a day after Trump expressed his unhappiness with Israel for violating the ceasefire.
“Indian equity markets have staged a recovery, supported by easing geopolitical tensions in the Middle East and a moderation in crude oil prices. While FIIs continue to withdraw capital, positive global cues are helping sustain domestic market momentum,” said Vinod Nair, Head of Research at Geojit Investments.