Defence stocks shoot up. But is this a knee-jerk rally?

When guns fire across the border, defence stocks fire up on the bourses. That's exactly what happened on May 9. Bharat Dynamics jumped nearly 8 per cent. Bharat Electronics and Paras Defence weren't far behind, rallying 4-6 per cent. HAL, the biggest player in India's defence space, also edged higher. The trigger? Rising military activity on the India-Pakistan border and a renewed policy push from the government to ramp up indigenous defence production. What's behind the buying frenzy? Defence stocks aren't new to investor attention, but they usually flare up when tensions spike or government orders pour in. This time, it's both. Geopolitical heat : Operation Sindoor, a recent military move, escalated tensions near the LoC. That's often seen as a signal for higher defence spending. Policy tailwinds : The government has been vocal about pushing the 'Make in India' narrative in defence. Budget 2025 earmarked over $20 billion for military upgrades, much of it expected to go to Indian companies.