In the financial year 2023-24, the Nifty India Defence Index showcased remarkable growth, outperforming the Nifty with a 44 percent Compound Annual Growth Rate (CAGR) compared to the Nifty’s 15 percent over the past five years.
A notable highlight was the significant surge in more than half of the index’s 15 constituent stocks, with five of them being public sector units (PSUs). This surge in performance can be attributed to the government’s emphasis on self-reliance, which has positively impacted the sector’s outlook.
Leading the pack was government-owned Cochin Shipyard, recording a remarkable gain of over 280 percent. Zen Technologies followed with a substantial gain of 191 percent.
PSUs such as Mazagon Dock Shipbuilders, Hindustan Aeronautics, Bharat Electronics, Mishra Dhatu Nigam, Solar Industries, and Astra Microwave also experienced substantial gains, ranging up to 189 percent.
In contrast, only two of the index constituents, Mtar Technologies and ideaForge Technologies, underperformed, disappointing investors with gains of 8 percent and negative returns of 46 percent, respectively.
Even microcap stocks saw significant growth, exemplified by NIBE, which boasts a market capitalization of Rs 1,691 crore and witnessed a substantial 270 percent rise in FY24. Additionally, in the SME space, Meson Valves skyrocketed by 229 percent following its listing in September 2023.
This surge in performance underscores the immense growth potential offered by the defence sector, making it a compelling opportunity for investors.
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