Defence Stocks Rise Up To 2% As India-Pak Tensions Escalate, Textiles, Banks Fall

As tensions between India and Pakistan intensified, Indian equity markets remained subdued on Friday, with investors shifting focus toward defence stocks amid fresh cross-border hostilities. Meanwhile, profit booking hit textile stocks, and banking shares came under pressure following overnight weakness in Indian American Depository Receipts (ADRs).

Defence-related companies such as Hindustan Aeronautics, Bharat Dynamics, and Bharat Electronics gained between 1% and 2%, continuing a strong rally seen over the past month. These stocks have surged up to 12% amid growing anticipation of increased defence spending driven by rising geopolitical threats.

Historically, heightened conflict between nuclear-armed India and Pakistan has led to a spike in defence sector valuations, as investors bet on expanded military contracts and procurement.

Adding to the speculation, Bharat Forge Chairman and Managing Director Baba Kalyani revealed that the company has been called to Delhi for a meeting next week, hinting at possible discussions around defence preparedness. Kalyani Group, known for its artillery systems, armoured vehicles, and missile technology, is expected to be among the firms participating in strategic consultations. Other attendees have not yet been disclosed.

The market reaction came after reports of fresh shelling by Pakistan across the Line of Control (LoC) in areas including Poonch, Rajouri, Uri, and Chowkibal-Kupwara. One civilian was killed in Uri, and multiple homes were damaged. India reported successfully intercepting and neutralising drone and missile strikes aimed at military installations in Jammu and Pathankot, with additional threats thwarted across 15 other locations.

As the situation evolves, investors continue to monitor defence developments closely, while broader market sentiment remains cautious.