India-Pak Tensions Trigger Rally in Defence and Drone Stocks

Following the Pahalgam terror attack on 22nd April, military tensions between India and Pakistan escalated sharply, sparking fears of a potential conflict. As diplomatic channels struggled to contain the fallout, markets closely tracked every development, including official statements, leading to the eventual announcement of a ceasefire.

During this tense period, shares of drone and defence technology firms like Ideaforge Technology, Zen Technologies & Paras Defence surged by over 10%, reflecting investor expectations of increased defence spending and a strategic pivot toward unmanned warfare capabilities. The sustained rally in these stocks highlights how geopolitical instability can rapidly reshape market sentiment and sectoral outlooks.

Drone and Defence Stocks See Strong Buying

On Friday, 9th May, shares of Ideaforge Technology rose nearly 17% from ₹383 to ₹462, while Droneacharya Aerial Innovations went from lows of ₹64 to ₹67, and ZEN Technologies rallied from ₹1304 to ₹1404, each gaining around 5% on the same day. The broader defence segment also participated in the rally, with firms such as Axiscades Technologies, Data Patterns, and Bharat Electronics Ltd posting gains of over 10% in just two trading sessions on the 8th and 9th of May.

The rally coincided with broader market optimism, as the BSE Sensex and Nifty 50 recorded one of their strongest sessions in months. However, defence stocks stood out for their direct correlation with geopolitical developments.

Also Read: Best Drone Stocks in India in May 2025

India to Focus on Make in India for Defence Equipment 

Following the renewed ceasefire agreement between India and Pakistan, the current trend in the defence sector suggests a more focused effort on modernisation. With India’s FY26 defence budget pegged at ₹6.81 lakh crore, including ₹1.8 lakh crore for capital expenditure, the sector remains a key priority for policymakers.

An estimated $130 billion opportunity lies in India’s defence modernisation over the next 5 years, driven by investments in indigenous platforms such as LCA Tejas, Astra missiles, and advanced drone and radar systems.

Conclusion

Despite the short-term market movements driven by geopolitical risk, investor sentiment appears anchored in the long-term structural growth of India’s defence sector due to budgetary allocations and focus on Make in India. As the country advances its goal of strategic autonomy and technological self-reliance, defence and drone firms are likely to remain under active market watch.

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