A total of 68 % of the capital procurement budget will be earmarked for domestic industries for 2022-23. This is a marked jump of 10% from the previous year’s 58% allocation. So, only 32% of projects will be outsourced. This will help Indian defence companies get more projects and generate higher revenues. All of this will take defence stocks to new heights.
Indian Equity market is witnessing a downward trend since the last October. Nifty 50 after reaching its all-time high of 18604 in October 2021 has fallen by 16 per cent. This fall in the market is due to a combination of global and local factors, which does not seem to subside in near future. One of the factors that have pushed the global economy into slippery path is invasion of Ukraine by Russia. This has put huge pressure on already worsening global supply chain.
In all these turmoil in the market, defence stocks have fallen less and have shown resilience. You might be wondering, what might be the reason behind such stubbornness in the defence stocks. One of the factors that have made a tectonic shift in the mind of many nations is Russia’s invasion of Ukraine, which has forced them to hike their defence budget.
For example Germany allocated USD 113 billion towards their military spending and even our hostile neighbor China has increased its defence spending by 7.1% and revised its target to USD 229 billion. Many other countries have also increased their defence budget and hence defence stocks have outperformed in the process. So, countries in the world are making defence their priority and an arms race once again after the end of Cold War.
This story is from the July 2022 edition of Indian Economy & Market.
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This story is from the July 2022 edition of Indian Economy & Market.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
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