On Friday, the benchmark equity indices made for an ugly spell of the day for Sensex as soaring military tensions between India and Pakistan disturbed investors and sent a blanket selling sentiment across Dalal Street. The BSE Sensex tumbled more than 700 points, and the Nifty 50 fell below the psychologically important 24,000 levels. The downtrend had been initiated by renewed cross-border drone and missile attacks by Pakistan, which had raised concerns of a deeper conflict and forced traders to go into a risk-off position.
Volatility spiked sharply as the India VIX increased 3.51 %, a measure of market fear, attributed to growing fears of geopolitical instability. The broader markets were also badly affected, with Nifty Midcap100 and Smallcap100 down by 0.40% and 1.22% respectively. Except for some concentrated pockets of Nifty Auto, PSU Banks & Consumer Durables, the entire sectoral Nifty indices were trading in deep red.
But, unlike the rest of the market gloom, defence and drone manufacturing stocks bucked the trend and ramped up. With India rapidly increasing its dependence on unmanned systems in its military operations, investor optimism sharpened on companies positioned to gain from a spike in defence spending.
ideaForge Technology topped the gainers and its shares rose nearly 17% to ₹450 on the BSE following a report that Indian forces deployed suicide drones to destroy air defence systems in Lahore and Multan. The revision of military procurement expectations strengthened each of Droneacharya Aerial Innovations, ZEN Technologies, and Paras Defence by an intraday 5%.
In non-defence news, Titan Company shares rose by almost 5% and closed at ₹3,530 as the firm reported superb Q4 and FY25 numbers and declared a dividend of ₹11 per share. When brokerages, such as Motilal Oswal, reiterate a ‘Buy’ rating and a ₹4000 target price based on strong brand equity and growth potential, then Titan gained more than ₹15,000 crore in market cap.
Analysts advise to stay in defence and consumer durables during the day’s losses in expectation of outperformance.
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