India’s defence-focused mutual funds are currently enjoying a significant bull run, with one-month returns ranging from 13.67% to 18.75% a standout performance compared to broader equity indices. The surge is being fuelled by heightened investor interest, strategic government initiatives, and recent geopolitical developments.
The primary catalyst for this sharp uptick in returns is a renewed focus on domestic defence manufacturing, supported by government policies that promote self-reliance in defence production.
Recent increased budgetary allocations have triggered optimism among investors, causing a rally in defence-related stocks, including those in avionics, electronic warfare, and combat systems.
While benchmark indices like the Nifty 50 slipped marginally by 0.17% to 25,019.80, the Nifty India Defence Index emerged as the top-performing sectoral index, rising 5.5% to 8,309.15 in a single session on the National Stock Exchange (NSE). On average, defence mutual funds clocked returns of around 17.7%, far outpacing most other equity categories.
| Fund Name | 1-Month Return (%) |
| Motilal Oswal Nifty India Defence ETF | 18.52% |
| Motilal Oswal Nifty India Defence Index Fund | 18.45% |
| Aditya Birla Sun Life Nifty India Defence Index Fund | 18.43% |
| HDFC Defence Fund | 13.67% |
Despite trailing slightly behind its peers, the HDFC Defence Fund still delivered a solid return, underscoring strong sector-wide performance.
The journey hasn't been without turbulence. Defence mutual funds experienced a volatile phase between December 2024 and early 2025, marked by profit booking and sectoral correction. However, sentiment made a decisive turnaround in April 2025, leading to a 17.7% spike in May driven by robust government defence expenditure signals and improved market sentiment.
Read More: Cochin Shipyard, Mazagon Dock, and Paras Defence in Focus on May 19 Amid Defence Stocks’ Rally.
The recent rally in India’s defence mutual funds highlights how sector-specific developments and policy shifts can drive market sentiment. With geopolitical factors and domestic initiatives playing a growing role in shaping market trends, the defence sector could remain in investor focus in the near term.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
Published on: May 19, 2025, 1:25 PM IST
Neha Dubey
Neha Dubey is a Content Analyst with 3 years of experience in financial journalism, having written for a leading newswire agency and multiple newspapers. At Angel One, she creates daily content on finance and the economy. Neha holds a degree in Economics and a Master’s in Journalism.
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