Nifty India Defence index: Defence company shares went up very fast on Wednesday, January 28. This happened just before the Budget 2026-27 which will be shown on Sunday, February 1. Many investors were excited because they think the government will give more money to defence. The mood also became strong because of the India-EU deal and good Q3 results from companies like Bharat Electronics Limited.
By the end of the day, the NIFTY INDIA DEFENCE index reached 8,167.95. This was up by 530.70 points or 6.95%. Every stock in this index finished in green. Data Patterns rose the most with a jump of 13.52%. BEML went up by 10% and Solar Industries India climbed 9.42%. Mishra Dhatu Nigam or MIDHANI gained 9.22% and Bharat Electronics or BEL moved up by 9.21%.
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Budget hopes push Defence Stocks higher
Many experts believe defence will get special focus in the coming Budget. They expect capital spending for defence to grow by nearly 20% to 25%. Rajkumar Singhal from Quest Investment Managers said defence could get more support to help India make more high-tech products like drones and anti-drone systems inside the country.
Sonam Srivastava from Wright Research PMS also shared similar thoughts. She said the government’s push for local production and more buying from Indian companies will help defence firms grow for many years. Support for research and exports may also help companies earn better profits and reduce the need to import defence items.
Samir Sheth from BDO India said Budget 2026 is very important for defence manufacturing in India. He said companies are hoping for clear long-term plans and faster deal approvals. He added, “In our view, predictability in defence expenditure is important as compared to the headline allocations. This is what allows domestic players to invest in scale and technology due to the stable order visibility,” Sheth added.
The EY Economy Watch report also talked about this idea. It said, “The share of capital expenditure in total government expenditure may be increased further, but changing its composition in favour of advanced technology sectors such as AI, GenAI, space, robotics and advanced infrastructure, as well as defence capital expenditure, is desirable,” the EY Economy Watch report said.
India-EU deal
Another big reason for the rally was the new India-EU agreement signed on Tuesday. Prime Minister Narendra Modi and top EU leaders announced a five-year plan to work together on trade and defence. They also signed two important deals. One is for defence and security cooperation and the other is to help Indian talent move to Europe.
EU leader Ursula von der Leyen spoke about the defence deal and said Europe and India want to be strong partners. She said, “We are not only making our economies stronger, but we are also delivering security for our people in an increasingly insecure world. And today, the world’s two largest economies and democracies launched their first-ever security and defence partnership,” she said.
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Reports say this Security and Defence Partnership will help both sides work closely on defence. It will also allow Indian companies to join the EU’s SAFE programme. SAFE is a Euro 150 billion fund made to help Europe improve defence readiness. India and the EU are also planning talks on a Security of Information Agreement which may help defence companies from both sides work together better.
BEL Market
Good Q3 results from Bharat Electronics also lifted market mood. BEL reported a net profit of ₹1,579 crore for Q3 FY26. This was 20.4% higher than last year. Revenue grew 24% to ₹7,154 crore in the same quarter. For the period up to Q3 FY26, BEL said its revenue reached ₹17,302.46 crore compared to ₹14,538.30 crore last year. Profit after tax for this period stood at ₹3,845.32 crore, higher than ₹3,183.47 crore in the previous year.
