Source: Mint
Defence stocks in India noses-dived on Tuesday, June 24, after a potential ceasefire announcement between Israel and Iran. Defence stocks had risen recently off the back of tensions in the Middle East, however with peace on the horizon, the market believed it was time to take profit.
The Major Defence Stocks in the Red
Most companies in the Nifty Defence index started the day with losses. Out of 18 companies, 17 opened lower.
- BEML was the biggest loser, falling 6.4% to ₹4,481.
- Garden Reach Shipbuilders (GRSE) dropped 5.2% to ₹3,313 apiece.
Several other major defence stocks also saw a decline of over 2%, including Mishra Dhatu Nigam, Astra Microwave, Paras Defence, Bharat Dynamics, Data Patterns, Zen Technologies, Unimech Aerospace, and Cochin Shipyard.
The Nifty Defence index fell 2.2% to a low of ₹8,868, marking its second largest decline this month, given these declines.
Why Are Defence Stocks Falling?
The fall comes after the U.S. President Donald Trump announced that Israel and Iran agreed to a 12 hour ceasefire. He stated “It has been fully agreed by and between Israel and Iran that there will be a Complete and Total CEASEFIRE … for 12 hours, at which point the War will be considered ENDED!” Trump wrote on Truth Social.
While Iran denied that any agreement exists, its foreign minister Seyed Abbas Araghchi, although he indicated that the country was prepared to cease hostilities.Israel has not officially responded.
On the same day, Iran fired missiles at a US base in Qatar to retaliate for the US airstrikes on Iranian nuclear facilities. The US intercepted the missiles and there were no injuries.
These events provided some relief to global market fears, and investors responded by selling defence stocks.
The Profit Realization After a Rally
Defence stocks had been doing well in recent days as investors were anticipating more orders and government spending following the conflict. However, with hints of peace, many decided to cash in on the rally.
Analysts believe that this on and off behaviour is common, and they expect the long-term outlook for India’s defence sector to remain bright given the increased focus on local manufacturers and large order books.
In Brief:
The Defence stocks including BEML and GRSE plummeted sharply following the announcement of a ceasefire between Israel and Iran.Most stocks in the Nifty Defence index fell, with the overall index losing 2.2%. The fall was driven by profit booking as the tensions in the Middle East appear to be subsiding.
