BEL, HAL, other defence stocks fall up to 3% as Middle East war enters day 10. What are experts saying?

Shares of Indian defence companies such as BEL, HAL, BDL, among others, dropped up to 3% on Monday as the conflict in the Middle East entered its tenth straight day. The escalating tensions have also pushed oil prices sharply higher, with crude rising as much as 20% to cross $110 per barrel.

The decline has come despite the ongoing tensions involving Iran, Israel and the United States, which have renewed expectations of stronger investor interest in defence companies. Heightened geopolitical uncertainty has also raised hopes of higher export orders for Indian defence manufacturers. Reflecting this sentiment, the defence index has already advanced about 7% so far in 2026.

Harshal Dasani, Business Head at INVasset PMS, told The Economic Times earlier that India’s defence sector continues to show structural strength despite volatility in the broader equity markets. He pointed out that the Union Budget for 2026-27 allocated around Rs 7.85 lakh crore for defence spending, placing it among the largest defence budgets in the world and underlining the country’s focus on military modernisation.


According to Dasani, a sizeable portion of this spending is earmarked for capital procurement, with strong emphasis on domestic manufacturing under the Atmanirbhar Bharat initiative. In recent months, the Ministry of Defence has approved several procurement proposals covering aircraft, naval systems, missile platforms and electronic warfare equipment, which strengthens the long-term order pipeline for domestic defence companies. The government has also set a target of Rs 1.75 lakh crore in defence production by 2026 while continuing to push defence exports higher.

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Naren Agarwal, CEO of Wealth1, said the recent rally in defence stocks reflects a broader structural shift rather than just a short-term response to geopolitical tensions. He noted that the government’s strong push through the Budget has improved growth visibility for defence companies that already have large order books and multi-year execution pipelines.

He added that rising geopolitical uncertainties across regions have historically encouraged governments to increase defence spending. Markets tend to factor in such expectations early, which is why many defence stocks have already seen a sharp re-rating over the past few years.

In the near term, stock performance may be more selective and driven by fresh order announcements, execution timelines and export opportunities. Structurally, though, the sector continues to benefit from strong policy support, rising defence budgets and sustained long-term demand for indigenous defence capabilities,” Dasani said.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)