Amid Prime Minister Narendra Modi’s visit to Israel, defense sector companies have registered a tremendous rise in the Indian stock market. On Thursday, Nifty Defense India Index was seen trading with a gain of more than one percent. The reason behind this strong interest of investors is the news of a big possible defense agreement between India and Israel.
During this boom, there has been a huge rise in the shares of many major defense companies. Shares of Data Patterns rose up to five percent, while Astra Microwave Products gained nearly 4 percent. Similarly, shares of Unimac Aerospace and Solar Industries were also seen trading in the green with a strong gain of about 3 percent. Nifty India Defense has seen a rise of 1.48%.
Even the big defense companies in the government sector did not disappoint the investors. Shares of Bharat Dynamics Limited and Bharat Electronics Limited registered a rise of about one and a half percent. At the same time, shares of companies like Hindustan Aeronautics Limited and Paras Defense and Space Technologies also closed with gains.
What is special in defense agreement?
Prime Minister Modi arrived on his two-day visit to Israel on 25 February. His first visit after 2017 is being considered very strategic. Media reports suggest that this possible agreement will not be limited to just the normal purchase and sale of arms. Instead, the main emphasis of both the countries will be on technical transfer of state-of-the-art defense systems.
This agreement may include technology from major Israeli companies like Israel Aerospace Industries and Rafael Advanced Defense Systems. There is discussion that there could be technical partnership for systems like Arrow Missile Defense System, David’s Sling, Iron Dome and Iron Beam. This is expected to give great strength to India’s ‘Make in India’ and ‘Self-reliant India’ campaign.
‘Mission Sudarshan Chakra’ will gain momentum
India is rapidly moving towards a long-term development model in its defense sector. ‘Mission Sudarshan Chakra’ announced on Independence Day is a prime example of this. Its main objective is to develop a strong and multi-layered missile defense system for the country. This new technical cooperation with Israel will play an important role in turning this mission into reality.
Even during his address in the Israeli Parliament, the Prime Minister made it clear that in the current global circumstances, defense cooperation between the two countries is extremely important. Along with this, trade relations between the two countries are also deepening. The first round of important talks regarding the Free Trade Agreement has also started in New Delhi between 23rd to 26th February.
Expert opinion for long term investment
Market analysts believe that companies like HAL and BEL are in a very strong position for long-term investment. While HAL is a leader in aircraft manufacturing, BEL has a diverse portfolio of radar and electronic warfare. Mazagon Dock Shipbuilders is also strategically important in naval shipbuilding.
On the other hand, Bharat Dynamics Limited has a strong missile manufacturing base, but its business depends more on large orders. The performance of this company will completely depend on the order flow and its ability to fulfill it on time.
Disclaimer: This article is for information only and should not be considered as investment advice in any way. TV9 Bharatvarsha advises its readers and viewers to consult their financial advisors before taking any money related decisions.