Defence ETFs have soared over 17% in just one week, following India’s strong military response in Operation Sindoor and renewed government support for self-reliance in defence manufacturing.
Two popular schemes—Groww Nifty India Defence ETF and Motilal Oswal Nifty India Defence ETF—have clocked 17.16% and 17.17% returns respectively. A fund of fund (FOF) tracking the same index even posted 17.69%. The Nifty India Defence – TRI, their benchmark, rose by 17.22%.
What does this mean for you?
For retail investors, these gains might look tempting. A surge like this feels like you’re missing out on a party everyone else is dancing at. But here’s the thing—timing the market is not a strategy, it’s a gamble.
The defence ETF rally was triggered by a specific event—India’s counter-offensive after the April 22 Pahalgam terror attack. This response, showcasing homegrown military tech, drove investor confidence in India’s defence sector.
Behind the boom: Tensions, tech, and Modi
There’s no denying the momentum. PM Modi’s bold speech calling for “zero tolerance towards terrorism” and “Made in India” defence weapons has fired up market sentiment.
India’s defence budget speaks volumes. According to Anand Rathi Wealth, it has almost tripled in a decade—from ₹2.29 lakh crore in 2014–15 to ₹6.81 lakh crore in 2025–26. That’s 13.45% of the entire national budget.
So yes, the sector has muscle. But remember, muscles can cramp too.
Also Read India’s Defence Shipyards Are About to Explode in Growth – Here’s Why
Are Defence ETFs a smart buy now?
Not so fast. Experts warn against going all-in on sector-specific bets.
Sure, the defence sector looks strong today. But just last year, in the second half of 2024, these same ETFs were underperformers. Sectoral funds are cyclical—they shine one moment and stumble the next.
Instead, consider a diversified equity fund. You still get equity exposure, but without putting all your firepower in one bunker. Options like multi-cap, value, or contra funds offer more stability through market cycles.
As Shweta Rajani from Anand Rathi puts it, “Defence is promising, but single-sector investing isn’t suitable for every investor.”
Final thought: Don’t chase the news—build your shield
Operation Sindoor might win battles, but winning with your money needs long-term vision. Adding Defence ETFs purely out of FOMO might just leave your portfolio exposed when the noise dies down.
Think of it this way: A soldier never walks into a war with just one weapon—why should your portfolio?
Disclaimer:
This article is for information only and not financial advice. Please do your own research or talk to a financial expert before investing. Investing has risks, and past results don’t guarantee future success.
Also Read A 34-Fold Growth in Defence Exports: Is India About to Become the Global Arms Giant?
