Indian defence stocks have witnessed a remarkable rally amid rising tensions between India and Pakistan in the aftermath of the recent Pahalgam terror attack. Several companies have recorded gains of up to 32% within just a week.
The tragic incident that occurred on April 22, 2025, in the Baisaran Valley of Pahalgam, Kashmir, claimed the lives of 26 tourists and has significantly altered the geopolitical landscape between India and Pakistan.
As a result of the Pahalgam terror attack, there is a surge in investor interest towards companies operating in the defence and security sectors. This article analyses the top-performing defence stocks and the reasons behind their impressive rally.
Top Performing Defence Stocks
The heightened tensions have translated into significant gains for defence stocks across the board:
Paras Defence and Space Technologies Ltd. [NSE:PARAS]
This stock has emerged as the frontrunner, recording an impressive gain of approximately 34.5% since the incident. As of April 30, 2025, the stock was trading at ₹1,331.00, marking a substantial increase from pre-incident levels. The company’s board is scheduled to meet on April 30 to consider stock split options and dividend payments for the financial year ended March 31, 2025.
Data Patterns (India) Ltd. [NSE:DATAPATTNS]
Data Patterns’ stock performance has also witnessed robust growth, with prices rising by about 7.54% on April 28 alone, taking its cumulative gain since the attack to 32%. As of April 30, 2025, the stock was trading at ₹2,462.00 per share. The company specialises in defence electronics and has benefited from the anticipated increase in defence modernisation efforts.
Bharat Electronics Ltd. [NSE:BEL] and Hindustan Aeronautics Ltd. [NSE:HAL]
As per the latest BEL and HAL stock news, both shares have recorded gains of up to 12%, contributing to their overall post-attack rally. BEL, a leader in defence electronics and radars, stands to benefit directly from rising investments in surveillance, communication, and electronic warfare systems. As of April 30, 2025, BEL was trading at ₹312.95 and HAL was trading at ₹4,480.00.
Other Notable Performers
Garden Reach Shipbuilders and Engineers Ltd. [NSE:GRSE] showed impressive performance with a rally of up to 12% post the incident, trading at around ₹1,913.00 on April 30, 2025. Similarly, Mazagon Dock Shipbuilders Ltd. [NSE:MAZDOCK] and Cochin Shipyard Ltd. [NSE:COCHINSHIP] have also posted significant gains, trading at ₹3,035.50 and ₹ 1,585.00 as of April 30, 2025, respectively, reflecting the broader sector-wide uptick.
Drivers Behind the Defence Stock Rally
Several factors have contributed to the surge in defence stocks following the Pahalgam incident:
- Heightened National Security Concerns: The attack has renewed focus on border security and counter-terrorism measures, potentially leading to increased defence spending.
- Strategic Defence Procurement: India and France have formally announced the conclusion of a ₹64,000 crore deal for 26 Rafale-M fighter jets, with deliveries set to begin from mid-2028 and likely to be completed by 2030.
- Investor Sentiment: Market participants are anticipating a boost in defence outlays, similar to what was observed following previous security incidents such as Uri and Balakot.
- Geopolitical Tensions: The statements from Pakistan’s Defence Minister Khawaja Muhammad Asif, warning of a possible military incursion by India have further fuelled speculation about increased defence preparedness measures.
Top Defence Stocks to Watch in 2025
As geopolitical dynamics continue to evolve, certain top defence stocks to watch in 2025 include:
- Bharat Electronics Ltd.: As a leader in the defence electronics and radars, the company is in a great position to benefit from the growing investments in surveillance systems.
- Mazagon Dock Shipbuilders Ltd.: The company possesses a strong order book and reasonable valuations, making it an attractive long-term prospect.
- Bharat Dynamics Ltd. [NSE:BDL]: Known for its missile systems, the company stands to benefit from India’s focus on strengthening its offensive capabilities.
- Paras Defence and Space Technologies Ltd.: The main reason behind Paras Defence share price rally is that it is expected to play a vital role in force multiplication and threat mitigation in counter-terror operations.
Future Outlook for Defence Sector Investments
While the recent rally in defence stocks has been impressive, market analysts advise caution. The tensions with Pakistan are viewed as temporary, and there might not be a fundamental shift warranting aggressive fresh buying at current levels. Investors who entered at lower levels may continue to hold their positions, but new entrants might prefer to wait for better entry points or further clarity on developments.
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