India-Pak tensions: Defence stocks in focus ahead of Delhi meet; Baba Kalyani says this

Defence stocks such as Bharat Forge, Hindustan Aeronautics Ltd and Bharat Dynamics Ltd would be in focus on Friday morning after the Modi government reportedly asked defence makers for a meeting as early as next week. In response to a question on whether the government had asked the defence industry participants to ramp up production amid deepening of India Pakistan tensions, CMD at Bharat Forge Baba Kalyani told CNBC TV18: "We’ve been called to Delhi next week. Our team is going. I can’t say more.”

Kalyani Group manufactures artillery systems, protected vehicles, armoured vehicles upgrade, Ammunition, missiles and air defense solutions and defense electronics. 

It was not confirmed which other defence makers have been asked to reach New Delhi. Other major defence makers in India are state-run Bharat Electronics Ltd, Hindustan Aeronautics Ltd and Bharat Dynamics Ltd (BDL). 

Hindustan Aeronautics manufactures LCA Tejas and Sukhoi Su-30MKI. BDL builds guided missiles, underwater weapons, and allied defense equipment for the Indian Armed Forces, including Akash missiles. BEL, on the other hand, is engaged into making defence communication products, land-based radars, naval systems and electronic warfare systems. 

Following India's Operation Sindoor, Pakistan tried to hit military targets in as many as 15 Indian cities. This was reportedly foiled by India with the help of India’s Integrated Counter-UAS Grid and Air Defence systems. In response, the Indian Armed Forces carried out targeted strikes on Pakistan’s air defence systems—neutralising the HQ-9 unit in Lahore. 

Domestic defence stocks settled mostly lower today. But they have risen quite a bit ever since Pahalgam terror attack on April 22. Israeli Elbit Systems, which manufactures Kamikaze drone, rallied amid India-Pakistan tensions, so did shares of China's Avic Chengdu Aircraft Co Ltd, the maker of Pakistan's J-17.

In a series of post on X, Kotak Securities said defence stocks have historically acted as sentiment indicators during geopolitical events. Investor interest rises when national security is in focus, often leading to short-term rallies, it noted. 

"After the 2016 surgical strikes and the 2019 Balakot airstrikes, defence stocks gained rapidly, while the broader index experienced temporary volatility before stabilising," Kotak Securities said on May 7.

It said the price movement is partly emotional and partly narrative-driven, as defence companies are seen as symbols of national strength, and any related headlines tend to amplify trading volumes.

"However, not all gains are speculative. Companies like HAL and GRSE have secured significant orders, including aircraft, submarines, and naval vessels, indicating real business activity beyond sentiment," it added.

For FY26, the defence budget for India stood at Rs 6.81 lakh crore, with Rs 1.8 lakh crore allocated for capital expenditure.This points to a structured policy focus on modernisation and indigenous production under initiatives like Make-in-India, Kotak said.