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Budget 2026: Defence stocks including Bharat Electronics, Mazagon Dock Shipbuilders, Hindustan Aeronautics, Bharat Dynamics, Apollo Micro, Data Patterns (India), and others declined on February 1 after Finance Minister Nirmala Sitharaman did not make any defence-specific policy announcement in her Budget 2026 speech.

However, the government allocated ₹7.85 lakh crore to the defence sector in the Union Budget 2026, marking a 15% increase over the ₹6.81 lakh crore provided in FY26. The higher allocation signalled continued emphasis on military preparedness, modernisation, and welfare of defence personnel.

As per Budget documents, the total outlay for the Ministry of Defence for FY27 includes defence services revenue expenditure, capital outlay, defence pensions, and civil establishments under the ministry.

In the previous Budget, the Centre had earmarked ₹6.81 lakh crore for defence, making it one of the largest components of overall government spending.

“The higher allocation to defence underscores the government’s twin priorities of strategic preparedness and domestic capability-building. Beyond immediate security needs, capital-led defence spending has a powerful economic multiplier—supporting indigenous manufacturing, technology development and skilled employment. A sustained shift towards domestically sourced defence capital can strengthen India’s strategic autonomy while creating durable growth opportunities across the broader industrial ecosystem,” Varun Gupta, CEO, Groww Mutual Fund.

Ahead of the Budget, several brokerages had projected up to a 30% rise in the defence allocation, expecting a greater share to be directed toward domestic procurement, modernisation programmes, and research and development.

Shares across defence counters witnessed sharp declines, with Garden Reach Shipbuilders & Engineers plunging 14% to ₹2,382.00, Data Patterns (India) dropping 13.5% to ₹2,310.60, and Paras Defence and Space Technologies falling over 12% to an intraday low of ₹625.05.

Other major names HAL, Cochin Shipyard, Mazagon Dock Shipbuilders, BEL, BEML, and Bharat Dynamics declined around 10% each, while MTAR Technologies slipped 6% and Apollo Micro Systems fell 5% during the session.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

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