The ceasefire between India and Pakistan in the recent conflict has provided an unexpected but significant opportunity for Indian defence companies to present their products in global markets. This period of reduced geopolitical tension allowed these companies to capitalise on their advanced technologies and defence products, gaining visibility on the international stage.
As the conflict subsided, many defence stocks witnessed a rally, particularly those whose products played a critical role in supporting India’s military objectives during the war. This surge reflects the immediate demand for these defence products and the increasing recognition of India’s growing self-reliance in defence manufacturing.
The Debate: Fundamental vs Technical Analysis
There are two primary schools of thought in stock selection—fundamental and technical analysis. While fundamental analysis evaluates a company’s financial health, earnings growth, competitive advantages, and overall economic factors, technical analysis focuses on price movements, chart patterns, and market sentiment to make trading decisions.
We take a more hybrid approach to stock selection, focusing on Relative Strength and conducting multi-timeframe analysis using multi-chart types. This method allows us to analyse broader trends and deeper technical patterns while still considering a stock’s relative strength to the market.
Before we discuss the specific stocks, let us analyse the Nifty India Defence Index, which plays a pivotal role in gauging the overall strength of the Indian defence sector.
Nifty India Defence Index
Source: TradePoint, Definedge Securities
The Nifty India Defence Index, which tracks the performance of India’s key defence companies, has been on a solid upward trajectory. In mid-April 2025, the index hit a new high, signalling the robust performance of the defence sector. This was followed by a retest of the breakout zone in May, which further affirmed the strength of the bullish trend.
The subsequent resumption of the uptrend, taking the index to new all-time highs, signals the strength in the defence stocks within the index.
As the index continues to break new highs, it creates a favourable backdrop for individual stocks within the sector. With that in mind, we have shortlisted three stocks that stand out based on their technical performance and growth potential.
1. Bharat Dynamics Ltd (BDL)
Bharat Dynamics Limited (BDL) is a leading player in the Indian defence sector, specialising in producing guided missiles, ammunition, and other advanced defence systems. Established in 1970, BDL has played a pivotal role in strengthening India’s missile and defence capabilities. The company is known for its innovative solutions, having developed several cutting-edge products used by the Indian Armed Forces.
BDL Daily Chart
The stock price has recently surged, witnessing the highest trading volumes in the last 18 months. As the stock nears its all-time high, it exhibits strong upward momentum.
The recent breakout from a long consolidation zone further reinforces the possibility of continued growth. With the defence sector seeing increased global demand, BDL is positioned well to benefit from this trend, making it a strong candidate for those looking for long-term growth.
2. Bharat Electronics Ltd (BEL)
Bharat Electronics Ltd (BEL) is India’s foremost defence electronics manufacturer. Since its inception in 1954, the company has been at the forefront of developing various electronic systems, including radars, avionics, communication systems, and missile systems for the Indian Armed Forces. BEL is a key player in India’s push toward self-reliance in defence technology.
BEL Daily Chart
BEL’s stock price recently broke out from a nine-month consolidation phase, signalling a strong upward momentum. The high of ₹340.50 may act as minor resistance.
The current breakout and rising volumes suggest that the stock is entering a new growth phase, potentially triggering the next leg of its rally. The rising volumes indicate solid institutional and retail investor interest, confirming the strength of the bullish trend.
3. Garden Reach Shipbuilders and Engineers Ltd (GRSE)
Garden Reach Shipbuilders and Engineers Ltd (GRSE) is a leading manufacturer of warships and submarines for the Indian Navy. Established in 1884, GRSE is one of India’s oldest and most renowned shipbuilders. The company plays a critical role in India’s naval defence capabilities, contributing to the design, development, and construction of state-of-the-art naval vessels.
GSRE Daily Chart
GRSE’s stock price has shown strong technical performance, having consolidated in a range for about five months before breaking out in April 2025. After the breakout, the stock price retested the breakout level, and since then, the bullish momentum has resumed. This suggests that GRSE is potentially poised for a fresh rally, supported by increasing demand for naval defence products. As India modernises its naval forces, GRSE is well-positioned to capture a significant portion of this growth.
As the global demand for defence technology continues to rise, particularly in areas like missile systems, naval vessels, and electronic warfare, these companies are potentially set to benefit.
Disclaimer:
Note: We have relied on data from http://www.definedgesecurities.com throughout this article. Only in cases where the data was unavailable have we used an alternate but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Brijesh Bhatia has over 18 years of experience in India’s financial markets as a trader and technical analyst. He has worked with UTI, Asit C Mehta, and Edelweiss Securities. Presently, he is an analyst at Definedge.
Disclosure: The writer and his dependents do not hold the Stocks discussed in this article. However, clients of Definedge may or may not own these securities.
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