Amid rising tensions in West Asia, there was a rise in the shares of defense sector companies on Thursday. Shares of companies like Bharat Electronics, Mazagon Dock Shipbuilders and Hindustan Aeronautics rose by about 10 percent during trading. After three days of decline, the broader stock market also saw improvement. At the same time, after the news related to tension in West Asia, there was a rise in the global markets, the effect of which was visible on the shares of Indian defense companies.
Bharat Electronics was the biggest gainer in the Nifty Defense pack and it rose by about 3.6 percent. Shares of Mazagon Dock Shipbuilders also rose by about 5.3 per cent, while shares of Hindustan Aeronautics were seen trading up by about 0.5 per cent. Shares of 16 out of 18 defense companies included in the Nifty Defense Index were trading in the green. Whereas only two companies Cyient DLM and Dynamatic Technologies remained in the red.
Main reasons for the rise
1. Tension in West Asia
The increasing tension between Iran, Israel and America has increased interest in the shares of defense companies. Generally, in such situations, countries focus more on their defense preparedness. Due to this, the demand for defense equipment like missiles, drones, surveillance systems, ammunition and radar is expected to increase. In this hope, investors buy shares of defense companies.
2. Buying after the dip
Shares of this sector had fallen by about 1 percent in the last trading session. In such a situation, many traders considered it a good opportunity and made purchases, due to which the shares rose.
3. Strong buying in shipbuilding companies
Mazagon Dock Shipbuilders’ shares also witnessed a strong rise and rose by nearly 10 per cent. It is reported that the Indian Navy may finalize the deal to purchase six submarines from German company Thyssenkrupp Marine Systems at a cost of approximately Rs 99,000 crore. These submarines can be constructed at Mazagon Dock in Mumbai.