Defence Stocks Rise 13%, after India Reports Highest Ever Defence Production Growth in FY24

Shares of defense companies were buzzing in trade, surging up to 13% on July 5 after Defense Minister Rajnath Singh announced that the country's defense production recorded its highest-ever growth in 2023-24.

The value of production has reached ₹1,26,887 crore in 2023-24, which is 16.8% higher than the value of production in the previous financial year, the defense minister posted on social media platform X (formerly Twitter). Singh also stated that the government is dedicated to establishing a more conducive environment for developing India as a leading global defense manufacturing hub. 

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Prime Minister Narendra Modi also complimented this achievement. "Very encouraging development. Compliments to all those who have contributed to this feat. We are fully committed to nurturing a supportive environment to further enhance our capabilities and establish India as a leading global defence manufacturing hub. This will enhance our security apparatus and make us Aatmanirbhar!," he tweeted.

Following the announcement, shares of defense companies such as Bharat Dynamics, Bharat Electronics, Hindustan Aeronautics, Cochin Shipyard, and Data Patterns climbed higher in trade. 

Back in mid-June, upon assuming charge of the Defence Ministry for a second tenure, Rajnath Singh set an ambitious target to export over ₹50,000 crore worth of defense equipment by 2028-2029. 

Bullishness over the sector is also evident from the robust subscription numbers of the Motilal Oswal Nifty India Defence Index Fund. According to the asset management company's announcement on July 4, the fund, which is the first domestic passive fund focusing on the sector, raised ₹1,676 crore during its New Fund Offer (NFO) period. This amount marks the highest collection ever by an equity index fund during its NFO period. 

Furthermore, the Nifty India Defence Index has demonstrated impressive performance over the past one year and three years, achieving compounded annual growth rates of 177 percent and 89.5 percent, respectively, as of the end of May.