Operation Sindoor Triggers Sharp Rally in Defence and Drone Stocks:

Suspense crime, Digital Desk : Indian drone manufacturing and defence-related stocks have witnessed a remarkable surge after Operation Sindoor was launched as a military response to the Pahalgam terror attack. From May 7, the stock prices of defence and aerospace industry leaders like IdeaForge Technology, Paras Defence, Zen Technologies, Hindustan Aeronautics (HAL), Bharat Electronics and DCM Shriram Industries surged between 8% and 50%.

Optimism Among Investors Fueled By New Contracts

As per expectations, fresh announcement of orders and construction contracts is likely to come through, driving the majority of the new orders. Investment Sambre, who is the Head of Equities at DSP Mutual Fund, shared that the unfavourable market with so many headwinds makes the companies cautiously optimistic. Also, he pointed out that timelines for a lot of work in the defence space tend to get dragged out.

Expansion Of Self-Reliant Defence Capabilities

The integration of self-sufficient advanced technologies across systems, including innovations in drone technology, air defence systems, and electronic warfare, shows remarkable development in India’s defence industry. The recent display of operational readiness and advanced technology in the borders with Pakistan is gaining traction internationally and within the country.

Defence Stocks Viewed as Fairly Valued By Analysts Post Price Rally

Most analysts expect Indian defence stocks to be fairly valued after the recent surge in prices saw Indian defence stocks rally. These companies have proved the ability as well as the reliability of their indigenously developed technologies. Such firms are expected to continue their growth trajectory under the current defence strategy that emphasizes decisive action to threats.

While Major Players Expected To Do Well In The Short Term, Market Uncertainty Is Also Present

Manoranjan Sharma, Chief Economist with Infomerics Valuation and Ratings, has noted that leading defence companies are likely to perform well but in terms of stock price appreciation, it is difficult to set a limit. There are too many factors bearing on the uncertainty which makes long-term projections undesirable.