Defense stocks in China and India have moved in very different directions since the recent ceasefire between India and Pakistan. This is a reflection of investor sentiment and battlefield realities influenced by Operation Sindoor and its aftermath.
India began Operation Sindoor, which targeted terrorist camps in Pakistan and Pakistan-occupied Kashmir, following the Pahalgam terror attack. In response, Pakistan deployed extensive drone attacks and Chinese-supplied weaponry, including J-10C fighter jets and PL-15 air-to-air missiles.
To demonstrate its technological superiority and enable accurate strikes on Pakistani assets, India, however, mainly relied on its own defense systems. Subsequent satellite imagery refuted Pakistan’s claims of serious damage to Indian airbases and verified the success of India’s operations.
The market reaction was swift and decisive. Indian defence stocks surged as Operation Sindoor showcased the effectiveness of home-grown weaponry and advanced domestic technology. The Nifty India Defence Index jumped by 10% in just three days, with companies such as IdeaForge,
Bharat Dynamics, Cochin Shipyard, and Garden Reach Shipbuilders & Engineers (GRSE) reported increases of up to 38% in just one week. The stock prices of significant defense companies, including Paras Defence and Space Technologies, Mazagon Dock Shipbuilders, Bharat Dynamics, and Cochin Shipyard, have increased by 10% to 35% since the Pahalgam incident. Investor trust in India’s domestic defense capabilities and the anticipation of higher government defense spending in the wake of heightened military tensions are reflected in this rally.
Industry insiders credit a number of reasons for this increase:In stark contrast, Chinese defence stocks experienced a significant downturn. Firms like Avic Chengdu Aircraft Co. (maker of the J-10C) and Zhuzhou Hongda Electronics Corp (producer of the PL-15 missile) saw their shares fall by 9% and 10% respectively over three trading sessions. Other major Chinese defence companies, such as China Aerospace Times Electronics, Bright Laser Technologies, North Industries Group, China Spacesat, and AVIC Aircraft, recorded declines ranging from 5% to 10%.
This sell-off was triggered by the realization that Chinese military equipment, widely used by Pakistan, had underperformed against India’s indigenous systems. Furthermore, hopes of increased Chinese arms exports to Pakistan were dashed by the ceasefire, leading to a sharp reversal in investor sentimentIn addition to reflecting the results of the most recent conflict, the disparity in performance between Chinese and Indian defense stocks also points to more significant changes in the global defense industry. India’s defense industry has been strengthened by its proven military might and technological independence, while China’s standing as an arms supplier has suffered because of the perceived poor performance of its weapons in actual combat situations.
While Chinese defense stocks have plummeted as confidence in their products and export prospects waned following the India-Pakistan conflict, Indian defense stocks have rallied strongly in the post-ceasefire period on the strength of military success and expectations of increased government spending.
According to the TOI Report.
