Defense stocks: The shares of Indian defense companies continued to decline for the second consecutive day on July 11. Companies like Bharat Earth Movers Limited (BEML), Bharat Dynamics (BDL), Mazagon Dock and Garden Reach Shipbuilders (GRSE) broke up to 3.5 per cent during the business. The main reason behind this is the weak sentiments and profit booking on defense shares.
The shares of defense companies had seen a tremendous rise for three months before. The price of shares of many companies had jumped up to 80 percent. There were many reasons behind this fast, including operation vermilion, increase in defense budget of NATO countries and Iran-Israel Jung. However, after the impact of these factors has reduced, profits in defense shares have started.
Around 11.30 am, Bharat Earth Movers Limited (BEML) shares were trading at a price of Rs 4,437 with a decline of 3.6 per cent. The shares of the data pattern also fell by 3.4 per cent to Rs 2,844.5. GRSE shares were trading at Rs 2,823, while the stock of Solar Industries was trading at Rs 15,489.
Around 12:15 pm, Nifty’s India Defense Index fell 1.8% to 8,526. The shares of Majgaon Dock were trading at Rs 3,184 per share with a decline of 2.4%. Hindustan Aeronautics and Cochin Shipyard shares were trading with a decline of 1% and 1.5% respectively.
India Dynamics shares were trading at Rs 1,864.5 per share with a decline of 1.5%. Motilal Oswal Financial Services (MOFSL) has recently launched coverage with ‘Neutral’ rating on India Dynamics stock and has given a more target price of Rs 1,900.
Brokerage said, “We like BDL’s business model and also has the ability to increase its order book and revenue in the current environment. However, the current valuation seems a little more, so we will wait for a slightly more level to invest in it.”
Softening of geopolitical stress
Another reason for the decline in defense shares was reduced in geopolitical tension. US President Donald Trump indicated the ceasefire agreement between Israel and Hamas this week in Gaza. His statement has come in the middle of Israeli Prime Minister Benjamin Netanyahu’s visit to America. Apart from this, there has also been a recent softening in the increased tension in the Middle East between Iran-Israel, which has put pressure on the price of creed oil as well as defense shares.
Performance so far
India Dynamics shares have increased by more than 69 percent so far this year. While Hindustan Aeronautics shares have gained 19% and Majgaon Dock Shipbuilders’ shares have increased by about 46%.
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