Shares of defence-related companies fell as much as 15 percent when the Lok Sabha election results were declared, as investors rushed to take profits following a recent bull run. Initial counting trends indicated that the ruling NDA might secure fewer seats than anticipated, LiveMint reported.

The BSE Sensex and the NSE Nifty tanked as the 2024 Lok Sabha election results were declared(HT photo)

Shares of Bharat Electronics Ltd (BEL) plunged over 19.36% and Hindustan Aeronautics fell over 14.29%. Bharat Dynamics shares declined by 10% and Cochin Shipyard shares fell nearly 9%.

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Defence stocks have been particularly favored under the Modi government due to the government’s push for indigenizing defence manufacturing under the Atmanirbhar Bharat initiative.

Most defense stocks, including Bharat Dynamics, Bharat Electronics, Hindustan Aeronautics, Mazagaon Dock Shipbuilders, and Cochin Shipyard, delivered over twofold returns in the past year. Analysts had predicted a bout of profit booking on the day of the voting of the general elections, Moneycontrol reported.

Brokerages also anticipate that the defence sector will be among the primary beneficiaries if the BJP gets re-elected.

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“The focus of Modi 3.0 is likely to continue on developing the country’s public infrastructure, such as roads, water, metro, railways, defense, digital infrastructure, and green technologies,” Axis Securities said in a note.

Brokerage firm Jefferies said that capex for the defence and power sector have the highest visibility, or the potential for occurring.

The previous session saw shares of Hindustan Aeronautics, Bharat Dynamics, and Bharat Electronics surging nearly 10 percent, reaching their all-time highs, after exit polls predicted a return of the BJP-led NDA, suggesting the market is betting on policy continuity by the incumbent government.

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