Investors Should Hold On To Defence Stocks Amid Bullish Sector Outlook, Say Analysts
Investors must wait for a correction before making fresh buys, Vijay Chopra, managing director and chief executive officer at Enoch Ventures, said.
Analysts advised investors to hold on to defence stocks amid a bullish outlook for the sector but urged investors not to make fresh investments.
“Investors should hold on to the defence stocks and keep booking profit,” Vijay Chopra, managing director and chief executive officer at Enoch Ventures, told NDTV Profit.
Investors must wait for a correction before making fresh buys, he said. The government’s intentions regarding the sector have been clear and that, according to Chopra, has led to a spurt in their stock prices.
Defence Minister Rajnath Singh said on Thursday that the government will work to increase sectoral exports to Rs 50,000 crore by 2028-29 from the current Rs 21,083 crore.
Many defence companies have a strong order book, but they must make timely deliveries. “The order book of Cochin Shipyard Ltd. is twice or thrice the size of their market capitalisation.”
Jai Bala, founder and chief market technician at Cashthechaos, advised caution but wouldn’t suggest an exit as the sector is yet to offer a profit. A short-term pullback looks due as most defence stocks “look stretched," he said.
Among public sector undertakings, Bala recommended BEML Ltd. and Bharat Electronics Ltd.
On Friday, the Nifty and Sensex ended an eventful week at new closing highs. The NSE Nifty 50 rose 0.29% to 23,465.60, and the S&P BSE Sensex ended 0.24% higher at 76,992.77.
“...Buying interest in the auto, realty, and metal sectors kept traders engaged, while IT lagged,” said Ajit Mishra, special vice president-research, Religare Broking Ltd. “Additionally, the broader market buoyancy contributed to positive market breadth.”
Indications suggest further consolidation in the Nifty index. Traders are advised to use any dip around the 23,100–23,300 zone to initiate fresh positional longs. A decisive close above 23,600 could trigger an uptrend towards the 24,000 zone. Meanwhile, a stock-specific trading approach is proving effective, and participants should align their positions accordingly, Mishra said.
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