Union Budget 2026: Defence Stocks BEL, HAL, GRSE and More in Focus Ahead of Union Budget on Capex Hopes

Defence stocks are grabbing the spotlight ahead of the Union Budget to be presented on Sunday, February 1, as investors bet on a possible increase in capital spending for the sector.

Defence Stocks in Focus

Finance Minister Nirmala Sitharaman is set to table her 9th consecutive Union Budget on February 1, with markets closely tracking the government’s fiscal stance and policy direction for India’s defence ecosystem as per news reports.

Heavyweights such as Bharat Electronics (BEL), Hindustan Aeronautics (HAL), Garden Reach Shipbuilders & Engineers (GRSE), Mazagon Dock Shipbuilders, and Bharat Dynamics are seeing heightened interest.

The drones and unmanned aerial vehicles (UAV) space is also in focus, with companies like Zen Technologies, Astra Microwave Products, Apollo Micro Systems, ideaForge, and Data Patterns expected to remain on investors’ watchlists.

Nifty Defence Index

The sector closed Friday’s session on a strong footing, with defence stocks delivering their best weekly performance since May 2025. The Nifty India Defence Index climbed over 1.5% to an intraday peak of 8,193.50 and is already up more than 21% since the last Union Budget.

Union Budget 2025 Defence Budget Allocation

In Union Budget 2025, the government earmarked ₹6.81 lakh crore for defence, marking a 9.5% year-on-year increase. Since 2020, India’s defence spending has risen by more than 40%, translating into an average annual growth rate of about 9.2% over the past five years.

As per news reports, capital expenditure on defence jumped 57% during April–November 2025, far exceeding the budgeted growth of 13% compared with the previous financial year.

This expansion, however, is built on a strong base. The Ministry of Defence signed contracts worth $23 billion in FY25, a record level and nearly double the previous peak, the report noted.

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