Nifty India Defence jumps 3% as Mtar Tech, Solar Industries, Data Patterns lead gains; here’s why defence stocks are rallying today

The defence stocks were trading higher on Monday, January 5, after the US raided Venezuela and captured its president, Nicolás Maduro, with Donald Trump vowing to "run the country" until there is a "proper" transition of power.

The Nifty India Defence, which constitutes 18 stocks, surged as much as 3% to an intraday high of 7,989.80. Except for Dynamatic Technologies (-2.61%), Mishra Dhatu Nigam (-0.9%) and Unimech Aerospace and Manufacturing (-0.36%), all the other 15 stocks on the index were trading with gains.

Mtar Technologies was the most contributing stock on the Nifty India Defence index, soaring 4.89%, followed by Solar Industries (3.95%), Data Patterns (3.58%), Astra Microwave (3.29%), Bharat Dynamics (3.06%) and Bharat Electronics (3.01%).

Further, shares of Paras Defence (2.98%), Hindustan Aeronautics (2.18%), BEML (1.44%), Garden Reach Shipbuilders & Engineers (1.3%), Cochin Shipyard (0.72%) and Mazagon Dock (0.7%) were also seen higher. Zen Technologies, Cyient DM and Bharat Forge were up 0.51%, 0.17% and 0.03%, respectively.

Factors behind defence stocks rally on Monday

On January 4, American forces carried out a large military operation in Venezuela, capturing President Nicolas Maduro and his wife and taking them to the US to face various charges, including narco-terrorism and drug trafficking.

Further, President Donald Trump plans to take control of Venezuela's oil industry and ask American companies to revitalise it.

The Indian think tank GTRI has said the US-Venezuela conflict will have a negligible impact on India's trade with the South American country.

Although India was a major buyer of Venezuelan crude in the 2000s and 2010s, bilateral engagement has weakened sharply since 2019 due to US sanctions, which forced India to cut oil imports and scale back commercial activity to avoid secondary sanctions, GTRI Founder Ajay Srivastava had said.

US President Donald Trump said that the US would ‘run’ the country and emphasised that he did not want the Maduro system to continue under a replacement leader, reiterating that there would be an interim US-led handover until a safe, proper and judicious transition could take place.

The Indian Army has signed a contract with aerospace and defence firm NIBE for the manufacturing and supply of ground equipment, accessories, ESP and ammunition for a universal rocket launcher system capable of integrating multiple rocket types, including rockets striking at long ranges of 150 kilometres and 300 kilometres, for ₹292.69 crore.

The order will be executed and delivered in tranches within 12 months.

Following this, NIBE shares rallied 9% to hit an intraday high of ₹1,345 on Monday.

Last week, the Defence Acquisition Council (DAC), chaired by Defence Minister Rajnath Singh, cleared capital acquisition proposals worth about ₹79,000 crore to boost the operational capabilities of the country’s armed forces.

The Council accorded “acceptance of necessity”, the first formal step in India’s defence procurement process, for a range of weapons, platforms and systems for the army, navy and air force at a meeting held on December 29, the defence ministry said.

For the Army, the DAC cleared proposals for loiter munition systems for artillery regiments, low-level lightweight radars, long-range guided rocket ammunition for the Pinaka Multiple Launch Rocket System (MRLS), and an upgraded integrated drone detection and interdiction system.

The loitering munitions would allow precision strikes against tactical targets, while the radars would improve detection and tracking of small, low-flying unmanned aerial systems. The guided rockets are expected to enhance both the range and accuracy of the Pinaka system for effective engagement of high-value targets.

The upgraded drone detection and interdiction system will help protect vital assets in both tactical battle areas and hinterland locations, the defence ministry said.