Brahmastra! More Bulls Seen In BEL, HAL, BDL Ahead; How Operation Sindoor Set New Wave for Defence PSU Stocks?

Indian defence stocks are expected to continue on their bull ride, despite already witnessing double-digit returns of 15-40% in 8 sessions. Major defence companies like HAL, BEL, BDL, Mazagon Dock, Cochin Shipyard and Paras Defence & Space Technologies soared after the 23-minutes of Operation Sindoor against Pakistani terrorist infrastructure, which showcased India's indigenous military strength.

On May 16, 2025, Hindustan Aeronautics (HAL) rallied by 5% to hit an intraday high of Rs 5,110, while Bharat Electronics (BEL) soared by 4.4% to hit the day's high of Rs 365.70 apiece. Also, Bharat Dynamics (BDL) stock jumped by 7.3% after touching its day's high of Rs 1,938.60 apiece.

These three government-backed defence stocks are the largest aerospace and defence contractors in India and also in the world's top 25 club. Following the latest rally, HAL and BEL are closing the gap to hit the top 10 military power list.

HAL and BEL are currently the world's 11th and 12th largest defence players in terms of market capitalization.

Other defence stocks like Mazagon Dock, Paras Defence and Cochin Shipyard climbed by 8% to 14% in a single day.

"A rally in defence stocks is on. With India achieving all its avowed strategic objectives, Operation Sindoor was an unqualified and unequivocal success, a success in which India's growing technological self-reliance played a pivotal role," Dr Manoranjan Sharma, Chief Economist, Infomerics Valuation and Ratings, said in a note.

These stocks are up by 15% to 40% since Operation Sindoor, which was carried out during the night of May 6-7.

Among these stocks, Cochin Shipyard outperformed with nearly 40% upside, while BDL and Paras Defence followed with gains of over 27% and 22%. HAL's close contender BEL outshined the company, with a 20% upside, while the latter gained by 16%. Mazagon Dock surged 19% as well.

All these companies emerged in focus for their indigenous products that Indian armed forces are utilizing. For instance, HAL supplies the largest fighter jets to India, namely the Su-30MKI and Tejas. The Su-30MKI is built as a joint venture between Russia's Sukhoi and HAL.

Meanwhile, Cochin- and Mazagon-built INS Vikrant, INS Visakhapatnam, INS Chakra, and INS Karanj are used by the Indian navy. INS Vikrant was even spotted surfacing around the Arabian Sea, moving towards Karachi, as per reports.

Explaining in the detail, the economist highlighted the war unmistakably demonstrated the massive might of the Indian military powered by home-grown weapons and cutting-edge domestic technologies.

Propelled by a distinct showcasing of India's indigenous military strength and effective deployment of indigenous systems, India's defence stocks, viz. Cochin Shipyard, Paras Defence, Mazagon Dock Shipbuilders, Bharat Dynamics, Bharat Electronics and Hindustan Aeronautics, rose steeply post Operation Sindoor, he said.

In retaliation to the Pahalgam terror attack on April 22, the Indian Air Force bypassed and jammed Pakistan's Chinese-supplied air defense systems in the late hours of May 7, completing the mission in just 23 minutes using Rafale jets, SCALP missiles, and HAMMER bombs, demonstrating India's technological edge.

In those 23 minutes, India eliminated nine terror camps based in Pakistan, targeting mainly infrastructures of Lashkar-e-Taiba and Jaish-e-Mohammed, resulting in the death of 100 terrorists. The Operation Sindoor led to a cross-border exchange of missiles and drones, and India showed immense strength of its armed forces and weapons.

India's multi-layered air defense, including the indigenous Akashteer system, shot down hundreds of drones and missiles. This also showcased India's growing capabilities in exporting advanced defense systems, as per the Ministry of Information & Broadcasting.

Before nodding to a ceasefire agreement, on May 9-10, India became the first country to strike 11 airbases of a nuclear-armed nation in a single operation, destroying 20% of Pakistan's air force assets. High casualties were inflicted at Bhoolari Airbase, including the death of Squadron Leader Usman Yusuf and the destruction of key fighter jets.

India's defence sector has come of age, and how! Adding, the economist said, "This seamless integration of indigenous hi-tech systems into overall national defence across the development spectrum, e.g., drone warfare, layered air defence, electronic warfare, etc. was done in a telling manner-a manner that has been driven home effectively in the Indian subcontinent and internationally. And the rest is history."

Looking ahead, stock market forecasts are always fraught with uncertainties because of a slew of global cues and domestic factors, the performance of the firm, industry and the macroeconomy, and future prospects.

Adding, Sharma said, "To my mind, the defence stocks are fairly valued because the capability and competence of the Indian defence products are clearly established and, therefore, defence stocks are set to move higher and onwards in "the new normal"- a normal, where patience cannot be mistaken for weakness, retribution and catastrophic revenge are inevitable in India's new war doctrine at a date, time and place of India's choosing."

Accordingly, the economist is predicting India's major defence stocks, viz. Cochin Shipyard, Paras Defence, Mazagon Dock Shipbuilders, Bharat Dynamics, Bharat Electronics and Hindustan Aeronautics, are likely to do well. But, he also said, "the rise in these stocks will be a function of various factors. Hence, it's difficult to quantify the rise in these scrips."

Noteworthy, Operation Sindoor emerged as a boon for Indian defence stocks, but a spoilsport for Chinese defense stocks, which provide massive defence equipment to Pakistan.

On Friday, the Hang Seng China A Aerospace & Defence Index performed volatilely. Top Chinese defence stocks such as China Shipbuilding Industry Corporation (CSICL), AVIC Jonhon Optronic Technology, AECC Aviation Power Co, AVIC Shenyang Aircraft Company, AVIC Xi'an Aircraft Industry (Goup) Company, China Aerospace Times Electronics, Tontec International, and China Spacesat are down by 1% to 3%.

China and Pakistan are involved in several projects to enhance military and weaponry systems, which include the joint development of the JF-17 Thunder fighter aircraft, K-8 Karakorum advance training aircraft, a tailor-made training aircraft for the Pakistan Air Force based on the Chinese domestic Hongdu L-15, space technology, AWACS systems, Al-Khalid tanks, which China granted license production and tailor-made modifications based on the initial Chinese Type 90 and/or MBT-2000. The Chinese has designed tailor-made advanced weapons for Pakistan, making it a strong military power in the South Asian region. The armies have a schedule for organising joint military exercises, as per Wikipedia.