Defence stocks drop: As early counting trends suggested that the ruling NDA would win fewer seats than expected in the Lok Sabha elections, shares of defence corporations fell 11% on the BSE today.
Bharat Electronics Ltd. (BEL) saw a share price decline of over 19.36%, while Hindustan Aeronautics saw a share price decline of over 14.29% to ₹260.45. By contrast, shares of Bharat Dynamics fell by 10%, while shares of Cochin Shipyard fell by about 9%.
Over the past year, investors have received multi bagger returns from some of these defense stocks. Analysts expected a surge of profit-taking to hit the market on the day of the general election voting since investors were holding significant profits.
As part of the Atmanirbhar Bharat plan, the government has put a lot of effort into encouraging domestic defense manufacturing. This has led to a lot of attention being paid to defense stocks, which have now hit all-time highs.
According to Mint, the stocks of Hindustan Aeronautics, Bharat Dynamics, and Bharat Electronics, among others, hit all-time highs the day before. This was because exit polls predicted that the BJP-led NDA would win and that the current government’s policies would stay in place. The prices of these stocks went up by about 10%.
Market experts also think that the defense business will benefit a lot from the BJP’s victory.
“The focus of Modi 3.0 is likely to continue developing the country’s public infrastructure, such as roads, water, metro, railways, defense, digital infrastructure, and green technologies,” a note from Axis Securities stated.
Meanwhile, the power and defense industries’ related capital expenditures have the most visibility, according to brokerage firm Jefferies. “If the current government retains a majority, as exit polls suggest, it adds wings to the strong sector outlook,” it stated.
In addition to defense stocks, PSU bank stocks had a precipitous decline of more than 10% on June 4 on the BSE due to early data that did not match the exit poll.
