Shares of Defence companies extended a rally for the seventh consecutive session on May 19 after the Defence Acquisition Council (DAC) approved emergency procurement powers for the armed forces, with a total allocation of around Rs 40,000 crore.
Defence stocks extended their winning streak for the seventh day in early trade on May 19, however, later in the day they pared initial gains to trade in red. The rally was triggered as the Centre granted Indian armed forces a Rs 40,000 crore budget under the emergency procurement powers
Shares of Defence companies extended a rally for the seventh consecutive session on May 19 after the Defence Acquisition Council (DAC) approved emergency procurement powers for the armed forces, with a total allocation of around Rs 40,000 crore.
“The contracts have to be finalised within 40 days, with deliveries to be completed in one year. The powers will be exercised by the three Service vice chiefs,” an official told the Times of India (TOI).
The Nifty India Defence index surged as much as 3 per cent in early trade, however, later during the session, the index took a sharp U-turn due to profit booking. As of 1:30 PM, it slipped into the negative territory, trading lower by 0.7 per cent. Over the seven sessions, the index surged as much as 24.3 per cent.
Zen Technologies emerged as the top performer among the index constituents, rallying 5 per cent to hit the upper circuit in Monday’s trade. Zen Technologies makes defense training systems, counter-drone solutions, and related technologies.
Following it, shares of BEML gained around 2.5 per cent, and Garden Reach Shipbuilders and Engineers (GRSE) climbed around 1.5 per cent.
Other index constituents such as Cyient DLM, Astra Micrwave Products, MTAR Technologies, Bharat Electronics Limited (BEL) and DCX Systems also traded in the positive territory.
However, index heavyweights Hindustan Aeronautics Limited (HAL) and Solar Industries India, both of which collectively hold 35.8 per cent weight in the Defence index, traded lower in the range 1.5 per cent to 2 per cent, dragging the index.
The top loser from the index was Paras Defence and Space Technologies, which traded over 5.5 per cent in the negative. Similarly, Dynamatic Technologies, Mazagon Dock Shipbuilders, Mishra Dhatu Nigam, Bharat Dynamics Limited (BDL), Unimech Aerospace and Manufacturing, Data Patterns and Cochin Shipyard also traded in the red in the range 1 per cent to 2.5 per cent.
Emergency defence procurement powers allow the armed forces to skip the lengthy procurement process when there is an emergency, like during conflicts, rising tensions, or natural disasters. These powers ensure that critical equipment is delivered quickly, often within just three to six months.
According to a report by ANI, Indian forces are focusing on buying critical equipment such as surveillance drones, kamikaze drones, long-range loitering munitions, and ammunition for artillery. The report added that the forces will also be procuring various types of air defence, missiles, and rockets.
This is the fifth time in the past five years that the Indian armed forces have been granted emergency powers to quickly buy military equipment.