Defence company shares were in the limelight on the bourses for the second consecutive session, after rallying up to 12 per cent on Friday, as the Ministry of Defence (MoD) approved the purchase of missiles, ammunition and weapon systems worth Rs 38,900 crore in wake of the heightened tensions with China.
Last week, the Defence Acquisition Council had approved the procurement of 12 SU-30 MKI, 21 MIG-29, and upgrades of existing 59 MIG-29 fighter jets. Most of the purchaes would be sourced fom Russia, while Sukhoi-30MKI fighters would be built at the facility of Hindustan Aeronautics located at Nashik.
The positive sentiment around defence stocks also received a boost after PM Modi paid a surprise visit to Ladakh on Friday morning and announced a three-fold increase in border infrastructure.
Hindustan Aeronautics soared around 6 per cent in early trading, post its 10-per cent rally on Friday, to touch a 52-week high of Rs 911.90 on the BSE. At 11:25 am, the stock was trading at Rs 894, higher by 4.9 per cent, on the BSE.
Bharat Dynamics also jumped nearly 9 per cent to hit a 52-week high of Rs 410.95 on the BSE in mid-morning trading, and was trading just off its highs at Rs 406.40, up 8 per cent.
Other defence stcok such as Walchandnagar Industries, Bharat Electronics and Bharat Forge have also gained 1 per cent to 6 per cent each,on the BSE.
In a related development, in May, the government hiked foreign direct investment (FDI) limit in the defence sector through the automatic route from 49 per cent to 74 per cent.
Meanwhile, the domestic markets rose for a fourth straight session to touch 4-month highS, powered by strength in HDFC Bank and buying interest in other financial stocks. The BSE Sensex was trading at 36,412.30, higher by 391 points or 1 per cent and the NSE Nifty was at 10,740.75, up 133 points or 1.2 per cent.
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