Defence stocks: HAL, BDL, BEL shares climb up to 5% today; here's why

Defence stocks such as Hindustan Aeronautics Ltd (HAL), Bharat Dynamics Ltd (BDL) and Bharat Electronics Ltd (BEL) climbed up to 5 per cent in Tuesday's trade, as investors judged the recent sharp fall in these stocks as unwarranted. The recovery in the broader market on firm global cues added to the sentiment.

In the Budget 2025, the capital outlay towards Ministry of Defence, 17 per cent of total capex outlay, was revised down to Rs 1.70 lakh crore in FY25. On this revised FY25 figure, FY26 budget allocation was increased 12.8 per cent to Rs 1.92 lakh crore. Goldman Sachs noted that the budgeted growth in defense spending still is higher than the nominal GDP growth assumptions of 10.1 per cent YoY.
 
HAL shares jumped 4.64 per cent to Rs 3,692.75. This stock is down 11 per cent in 2025 so far. BEL shares advanced 3.63 per cent to Rs 284. This stock is down 5 per cent in 2025 so far. Shares of BDL climbed 3.18 per cent to Rs 1,213 on BSE. The stock is still down 3 per cent in the past five sessions. Astra Microwave Products added 2.5 per cent to Rs 707.80. This stock is down 9 per cent in 2025 so far.

Zen Technologies and Data Patterns India were flattish in Tuesday's trade.

The allocation for the 2025-26 defence outlay is estimated at 1.91 per cent of the projected GDP in FY26. It is for procuring of new weapon systems, aircraft and warships. "To promote Make in India in defence, the Ministry of Defense (MoD) has earmarked 75 per cent of its new capital procurement budget of Rs 1.5 lakh crore for procurement from the domestic industry, with 25 per cent of the domestic share being reserved for the Indian private sector," Nomura India noted.

HDFC Securities said the FY26 budget's allocation of just 27.66 per cent of defence spending to capital expenditure, with the majority earmarked for personnel costs, was quite disappointing. It though noted that the government has established ambitious targets to expand defence production to Rs 3 lakh crore by FY29 and boost exports to Rs 50,000 crore.

"While these goals suggested an expectation of increased resource allocation, the actual 13 per cent rise in capital outlay to Rs 1.8 lakh crore fell short of market expectations," HDFC Securities.