A new geopolitical tension has erupted in Asia, with Thailand and Cambodia in an intense clash. A feud over temple sites blew up between the two countries' borders, which further pushed Thailand to launch F-16 jets reportedly at the Cambodian military on July 24. Regions around the two borders are heavily impacted, with several civilian deaths. Amidst this, in general terms, focus shifts to the aerospace and defence sector.
Why Are Defence Stocks Back In Focus?
At the time of writing, Indian defence stocks saw a mixed trend on BSE and NSE, and mostly the sentiment was fuelled by the broader market performance. Apollo Micro Systems stock dropped over 3.5% on BSE, while Astra Micro slipped by 1.3%.
Major giants like Bharat Electronics, Cochin Shipyard, GRSE, and Hindustan Aeronautics were down by 1% each. Bharat Dynamics stock slipped marginally.
On the other hand, Mazagon Dock, NIBE Limited, Swan Defence & Heavy Industries, Paras Defence & Space Tec, and Avantel traded bullish with gains of 1% to 5%.
As per experts, crises in geopolitics and war greatly impact the stock market dynamics. As per Grin Invest's earlier report, defence stocks tend to outperform broader indices during international conflicts, according to patterns in the past.
Thailand-Cambodia Clash:
The reason behind the feud is a series of events involving Ta Muen and Ta Moan Thom temples, which both countries have long claimed, and various other allegations.
As per the Thai army, a clash was reported at Ta Muen Temple Area, Phanom Dong Rak District, Surin Province in the morning of July 24.
Subsequently, six Cambodian personnel were observed, fully armed, including with RPG weapons, approaching the barbed wire area in front of the Thai operational base, as per Thai army's statement.
However, at around 08:20 hours, the Thai army said, "Cambodian forces opened fire toward the area opposite the operational base on the eastern side of Ta Muen Temple, at a distance of approximately 200 meters."
The Thai Army spokesperson explained, "The Royal Thai Army condemns the violent and inhumane actions of Cambodian forces in the case of using two BM-21 rocket weapons fired into a community area within the Border Area Development Centre, Kab Choeng District, Surin Province, at 09:40 hours."
The Cambodian's attack resulted in the death of 3 civilians. Following the morning claims over the Temple, Thailand launched an airstrike on Cambodian military bases with six F-16 fighter jets.
Before this, the Thai Army also blamed the Cambodian side for the covert placement of landmines in the border area of Chong An Ma, Nam Yuen District, Ubon Ratchathani Province, resulting in severe injuries to military personnel.
However, the Ministry of National Defence of the Kingdom of Cambodia has categorically rejected the allegations made by the Thai side, calling them 'baseless.
That being said, the tensions sharpened as Thailand reportedly closed all border checkpoints with Cambodia and even advised its nationals to exit Cambodia. Also, both the countries have expelled each other's ambassadors in less than 48 hours.
Also, the national newspaper of Cambodia said that the Thai government had decided to downgrade diplomatic relations with Cambodia. This included the recall of its ambassador from Phnom Penh and the expulsion of the Cambodian ambassador from Bangkok.
The newspaper added that in response, the Royal Government of Cambodia has decided to downgrade diplomatic relations with Thailand to the lowest level - that of Second Chargé d'Affaires. Additionally, all other Cambodian diplomatic staff at the Royal Embassy of Cambodia in Bangkok have been ordered to return to Cambodia.
As per the latest update, the Thai Army said, "RTA condemns the Cambodian actions of using weaponry to attack civilian targets within Thai territory. Recent incidents have resulted in civilian casualties and fatalities from such actions. The Thai side emphasizes its preparedness to defend our sovereignty and citizens."
On July 23, Lieutenant General Socheata emphasized Cambodia's readiness to protect its sovereignty, territorial integrity, and the safety of its people, declaring that Cambodia will never allow any foreign country to encroach upon its territory—regardless of the cost.
How Does It Impact India?
India has good relations with both Thailand and Cambodia.
India-Cambodia Relations:
India has an embassy in Phnom Penh, and Cambodia has an embassy in New Delhi.
Although both countries' relations go back to the ancient times, as of now, Indian population in Cambodia is stimated to be around 5000, include the floating population of petty businessmen engaged in selling household items such as mosquito nets, clothes, fashion jewellery, etc from eastern India. Indian diaspora in Cambodia generally are into professions such as doctors, NGO workers and business sectors like pharmaceuticals, education, restaurants, agriculture and plantations, etc., as per the Indian Embassy website in Cambodia.
India-Thailand Relations:
In April 2025, during Prime Minister Narendra Modi's visit to Thailand, both countries acknowledged the deep civilizational, cultural, religious and linguistic bonds and 78 years of establishment of diplomatic ties between India and Thailand. Both leaders held wide-ranging discussions on various areas of bilateral cooperation.
As per the Ministry of External Affairs report, India and Thailand have agreed on strengthening the existing mechanisms of defence cooperation, as well as promoting further collaboration between the defence sectors of the two countries, with particular emphasis on defence technology, defence industry, research, training, exchanges, exercises and capacity building, including by establishing appropriate mechanisms.
In general terms, if the tensions escalate further between Thailand and Cambodia, travel & tourism, aviation, exports and imports from and to India could see impacts of the new geopolitical crisis.
Disclaimer: The write-up is just for information purposes, and is not a recommendation to buy, sell or hold. We have not done fundamental or technical analysis and have no opinion on article mentioned. Neither, the author, GoodReturns.In nor Greynium Information Technologies should be held liable for any losses. Please consult a professional advisor.
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