These defense stocks should benefit from Budget 2026 announcements
What's the story
Goldman Sachs has identified a number of defense stocks that could benefit from the Budget 2026 announcements. The brokerage firm highlighted Solar Industries, Bharat Electronics, Bharat Dynamics, Data Patterns, and PTC Industries as potential beneficiaries of increased defense spending. The Union Budget for FY27 allocated ₹7.85 lakh crore to defense, an increase of 15.2% over last year's allocation of ₹6.81 lakh crore.
Investment areas
Focus on 'other equipment' benefits select defense players
Goldman Sachs noted that Solar Industries, Bharat Electronics, as well as Bharat Dynamics are well-positioned to benefit from the defense budget's focus on 'other equipment.' This category includes missiles, ammunition, and also radar electronics. Astra Microwave Products and Data Patterns could also see some trickle-down benefits from this increased spending.
Sector impact
Aerospace sector also set to gain
The aerospace sector is also set to benefit from the Budget 2026 announcements. The exemption of basic customs duty (BCD) on raw materials for making parts or components of aircraft, including engines, will benefit firms like PTC Industries and Azad Engineering. This move is expected to boost domestic production in the aerospace industry and reduce dependence on imports.
Market response
Nifty India Defense index loses ₹60,000cr in market cap
The Nifty India Defense index saw a sharp reversal from its intraday highs and ended lower after the Budget announcements. Bharat Electronics led the decline, with constituents of the Nifty India Defense index losing more than ₹60,000 crore in market capitalization.
Budget forecast
Market participants expect modest increase in defense budget
Market participants expect an 8-10% year-on-year increase in the defense budget, broadly in line with recent trends. Analysts say that while the higher allocations provide medium-term comfort, the share performance will depend more on how quickly contracts are awarded and projects move from approval to execution. The focus is expected to remain on capital expenditure, with domestic sourcing continuing to take priority.