Indian defence stocks witnessed a sharp rally on Friday as intensifying geopolitical tensions in West Asia drove strong buying interest across the sector. Investors moved into defence counters for the second consecutive session, pushing the Nifty Defence Index higher and lifting shares of key public sector shipbuilders and electronics suppliers.

During the trading session, the Nifty Defence Index rose more than 3 percent, building on the roughly 2.5 percent gain recorded in the previous session. The rally was broad-based, with 17 out of the 18 constituents of the index trading in positive territory.

Shares of Bharat Electronics Ltd, Garden Reach Shipbuilders and Engineers Ltd, and Mazagon Dock Shipbuilders were among the major gainers during the session. Mazagon Dock Shipbuilders emerged as the strongest performer on the index, climbing 6.92 percent and marking its sharpest rise in nearly nine months. Garden Reach Shipbuilders and Engineers also recorded strong gains of about 6.14 percent as investors accumulated defence manufacturing stocks.

The sharp move comes amid escalating tensions involving Iran, Israel, and the United States, which have heightened global geopolitical uncertainty.

Historically, such developments tend to influence capital flows into defence companies as markets anticipate higher military spending, accelerated procurement cycles, and increased government focus on security preparedness.

The renewed attention on defence stocks also coincides with India’s ongoing push to strengthen domestic military manufacturing under its broader strategic and industrial policies. Over the past few years, the government has focused heavily on increasing indigenous defence production, reducing reliance on imports, and strengthening the domestic defence ecosystem.

In a related development, Defence Minister Rajnath Singh recently stated that Garden Reach Shipbuilders and Engineers has been given special focus as part of efforts to strengthen India’s industrial defence base and make it more future-ready. The statement signals continued policy backing for domestic shipbuilding capabilities, particularly in naval platforms.

India’s defence manufacturing sector has been undergoing structural expansion, supported by increasing defence budgets, export ambitions, and a rising pipeline of domestic contracts. Public sector companies involved in electronics systems, naval platforms, and weapons manufacturing have been key beneficiaries of these policies.