Ideaforge To Garden Reach: Here Is Why Defence Shares Extend Decline Amid Rising Markets
Ideaforge Technologies fell the most after it declined 4.77% intraday, followed by Garden Reach Shipbuilders and Engineers that was down 4.70% on Wednesday.
Defence stocks that have rallied in the last few months extended declines for the second consecutive session on Wednesday, as the possible ceasefire between Iran and Israel dampened investors hopes over order inflows. The fall pushed the Nifty Defence to be the worst performing sector for the day, with a decline of 1.72%.
This comes after the Nifty India Defence fell 2.35% on Tuesday.
Ideaforge Technologies Ltd. fell the most after it declined 4.77% intraday, followed by Garden Reach Shipbuilders and Engineers that was down 4.70% on Wednesday. Paras Defence was also down 4.39%.
Zen Technologies Ltd., Mazagon Dock Shipbuilders Ltd., Cochin Shipyard Ltd., Bharat Electronics Ltd. and Bharat Dynamics Ltd. were down over 2%, extending the decline for the second day. Astra Micro was down 1.63%, while Bharat Forge was down 1.17%. Hindustan Aeronautics Ltd., MTAR Technologies Ltd., Solar Industries Ltd. and Unimech Aerospace Ltd. were down 1.94%, 1.25%, 1.80% and 1.58%, respectively.
"Most Indian defence companies are PSUs. Investors may consider one or two that could be outliers and perform well, given current dynamics. But valuations and delivery expectations are currently very inflated—frankly, they’re ‘stupidly’ valued. If you want to invest in defence, the US defence sector might be a better bet. The ETF for defence and aerospace in the US is up 30% year-to-date," Ajay Srivastava, managing director of Dimension Corporate Finance Services Ltd., told NDTV Profit.
This comes as the markets have extended gains for the second day. US President Donald Trump announced that Israel and Iran had agreed to a tentative ceasefire that would begin around midnight Washington time on Monday.
His announcement came just hours after Iran fired missiles at the Al Udeid Air Base in Qatar, where US Central Command has its regional headquarters, after promising it would respond “proportionately and decisively” to the weekend bombing by US forces of three nuclear facilities.
However, Iranian Foreign Minister Abbas Araghchi later clarified that no "agreement" on any ceasefire or cessation of military operations had been concluded, though Iran was willing to halt military actions if Israel stopped its strikes by 4 a.m. local time. Soon after this, sirens sounded across Israel as Iran launched a fresh strike on southern Israel. Israel's Beer Sheva has been hit by missile.
Despite the ambiguity, the market reacted positively to signs of de-escalation on Tuesday, reversing Monday’s heavy sell-off. However, they gave up some of the gains towards the end of Tuesday's session.
