Defence Sector In A Stronger Trajectory

While geopolitical tensions between Russia and Ukraine continue, tensions between China and Taiwan are rising. These geopolitical events have heightened the necessity for increased defence spending. This article includes insights into the defence sector as well as recommendations of two excellent companies that have made a mark in this industry

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"It is an unfortunate fact that we can secure peace only by preparing for war," said John F. Kennedy who served as the 35th president of the United States of America. If you recall, the Nifty 50 opened with a gap down of 815.3 points on February 24, 2022. On this day, the Russians invaded Ukraine's land. Although the markets have been sliding since October 2021 due to peak valuations, the Russia-Ukraine conflict has added fuel to this downward trend. The ongoing war has caused supply chain disruptions all around the world and has been one of the driving forces behind soaring inflation.

Even when things appear to be going well, the fight between the two is far from over. However, such a geopolitical occurrence has prompted governments throughout the world, including India, to enhance their national defence budget. In this article, we will examine the defence industry, its prospects and pick fundamentally solid companies from this sector. For the Indian economy, the defence industry is a key sector. With increased national security concerns, the sector is set to accelerate.

The continuing territorial disputes with Pakistan and China over control of the northern state of Kashmir and the north eastern state of Arunachal Pradesh, respectively, have increased demand for defence equipment in India. Over the previous five years, India has been among the top importers of defence equipment in order to obtain technical advantages over competitors such as China and Pakistan. Meanwhile, the government has taken many steps to stimulate 'Make in India' operations through policy support programmes in order to modernise its armed forces and minimise reliance on overseas' defence acquisition.