Paras Defence, Data Patterns, BEL, HAL, GRSE shares rally up to 32% since Pahalgam terror attack

Data Patterns (India) Ltd, Paras Defence And Space Technologies Ltd and Garden Reach Shipbuilders & Engineers Ltd (GRSE) led up to 32 per cent rally in defence stocks amid heightened India-Pakistan tensions, following the Pahalgam terror attack on April 22.

The attack on tourists in Kashmir's Pahalgam had left 26 dead, marking it the most severe incident of terror attack since the 2019 Pulwama bombing. Amid geopolitical tensions, it is believed that the government's defence sector spending may keep growing at healthy pace going ahead.

Data showed Data Patterns (India) Ltd climbed 32 per cent to Rs 2,576.40 level against April 21's closing of Rs 1,958.75. Paras Defence soared 27 per cent while shipping stocks GRSE, Cochin Shipyard Ltd and Mazagon Dock Shipbuilders Ltd climbed 9.5-12.5 per cent during this period. 

DCX Systems Ltd, Mishra Dhatu Nigam Ltd, Solar Industries India Ltd, Bharat Dynamics Ltd, Hindustan Aeronautics Ltd (HAL), Bharat Electronics Ltd (BEL) and Astra Microwave Products Ltd have advanced 5-9 per cent during this period. MTAR Technologies Ltd, Bharat Forge Ltd and BEML Ltd also delivered positive returns for the period.

These defence stocks were in focus on Wednesday morning after Pakistan's Information Minister Attaullah Tarar suggested that “credible intelligence” indicated that India was planning to conduct a military action against Pakistan in the next 24 to 36 hours. India has blamed the recent attack on cross-border terrorism, accusing Pakistan of harboring militant groups active in the region. In retaliation, New Delhi has suspended the Indus Waters Treaty and downgraded diplomatic ties with Islamabad.

As part of these actions, India has expelled Pakistan’s defence, naval, and air advisors from its diplomatic mission in New Delhi, declaring them persona non grata. Simultaneously, it has begun withdrawing its own military advisors from Islamabad.

Furthermore, the SAARC Visa Exemption Scheme for Pakistani citizens has been suspended with immediate effect. The Integrated Check Post (ICP) at Attari — the only active land border crossing between the two nations — has also been ordered closed.

Pakistani nationals currently in India with valid documents have been advised to depart by May 1.

Amid shifting global geopolitical dynamics, many nations are ramping up their defense spending, targeting allocations between 3 per cent and 5 per cent of GDP. Countries such as Germany, Spain, and Japan are significantly increasing their defense budgets in response to evolving security concerns.

In an expert session hosted by MOFSL, Captain Vishal Kanwar, Managing Director at PwC Advisory India, emphasized that India—currently allocating around 1.9 per cent of its GDP to defense—must strategically increase this to 4 per cent to address national security and technological imperatives.

"With rising threat perceptions in the South Asian region and the urgent need to modernize its military, India must enhance defense spending to maintain technological superiority and meet future operational requirements," Kanwar stated.

He also projected a major shift in capital expenditure, with allocations for modernization of the Indian armed forces expected to rise from 22 per cent to 40 per cent by 2047. Simultaneously, defense R&D spending is anticipated to increase from 1 per cent to 10 per cent of the total defence budget.