Defence stocks dropped sharply on June 24, breaking a two-day rally, as news of a ceasefire between Israel and Iran sent shockwaves through the market. With geopolitical tensions cooling down, investors rushed to book profits, pulling down several major defence names.
The biggest trigger came from an unexpected announcement. Former US President Donald Trump confirmed a ceasefire agreement had been reached between Israel and Iran, offering hope that the recent flare-up in West Asia might finally be over.
This surprise development not only brought relief to the oil market—cooling global crude prices—but also hit the red-hot defence sector.
The Nifty India Defence index, which had climbed more than 4% between June 20 and June 23, reversed course and fell 2.2% in Monday’s session. Out of the 18 stocks in the index, 17 were trading in the red. The sole gainer? Cyient DLM, which edged up just over 1%.
Among the worst hit were Garden Reach Shipbuilders, which crashed nearly 7% intraday. BEML tumbled over 6%, and Mishra Dhatu Nigam slipped more than 5%. Other laggards included Astra Microwave, Paras Defence, Zen Technologies, Bharat Dynamics, and Data Patterns, all of which saw drops between 2% and 5%.
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Even heavyweight defence stocks weren’t spared. Cochin Shipyard, Hindustan Aeronautics, Mazagon Dock, and Bharat Electronics all ended lower, losing up to 3%.
According to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the announcement signals “the worst of the conflict is over.” As a result, markets quickly shifted gears, moving away from defence bets made during peak tension.
Investors had previously hoped for increased defence spending by global powers amid worsening conflict, which would have meant bigger order books for Indian firms. But with the sudden calm, those expectations have deflated—at least for now.
This correction doesn’t necessarily spell long-term trouble for defence stocks. Many analysts still believe India’s long-term military modernization and self-reliance push will drive steady growth. But short-term sentiment clearly shifted with the news from West Asia.
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