Defence stocks traded lower in Thursday’s trading session (September 4), even as the Indian equity markets saw a rebound on the backdrop of the government’s decision to streamline Goods and Services Tax (GST) rates, which lifted investor confidence.
The 56th GST Council on Wednesday decided to simplify GST rates to two levels: 5% and 18%, by combining the 12% and 28% rates.
Ruchit Jain, VP – Equity Technical Research, Motilal Oswal Financial Services, highlighted that the defence stocks have corrected in the last one month and have not shown any signs of reversal yet.
The stocks also have not participated in the recent broader market pullback, and hence, it is advised to keep a wait-and-watch approach for momentum traders.
Looking at the fundamentals, Krishna Doshi, defence analyst at Ashika Institution Research, remains positive on the sector.
Doshi explained that this move is in line with the aspirations to increase India’s self-reliance and create Aatmanirbhar Bharat. It will facilitate lower procurement costs for the armed forces and reduce the working capital burden on defence PSUs and private suppliers.
“The GST rationalisation is a clear structural positive for the Indian defence ecosystem, benefiting both large platform manufacturers (HAL, BEL, MDL, GRSE, BDL) and specialised sub-system/component suppliers in the private sector. It strengthens the policy push towards self-reliance, affordability, and faster modernisation of India’s armed forces,” said Doshi.
Technical Views
Hindustan Aeronautics share price opened at ₹4,473.15 apiece on the BSE, the stock touched an intraday high of ₹4,484.85, and an intraday low of ₹4,435.10 per share. According to Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, Hindustan Aeronautics’ share price is in correction mode and on support. Fresh longs should be added if prices move past the 4,800 levels, he advised.
Bharat Electronics share price opened at an intraday high of ₹381.60 per share, stock touched an intraday low of ₹373.60 per share. Bhosale said that volumes have dried down and prices have slipped below key moving averages, while the long-term outlook remains positive.
Mazagon Dock share price opened at ₹2,730.30 per share, and the stock touched an intraday high of ₹2,749.95 and an intraday low of ₹2,682 apiece on the BSE. Bhosale believes that the Mazagon Dock share price is in correction mode and on the support of 200 SMA; fresh longs should be added if prices move past the 2,850 levels.
Garden Reach share price opened at ₹2,505.55 apiece on the BSE, the stock touched an intraday high of ₹2,525 per share, and an intraday low of ₹2,420 per share. According to Bhosale, Garden Reach share prices are moving in a lower top, lower bottom, with bearish crossover of 50 and 89 EMA. He added that prices are likely to see further weakness in the near term.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
