After rising over 120% this year, will defence stocks strike again or run out of steam?

economictimes.indiatimes.com:

Defence stocks have been firing on all cylinders this year, with most of them giving double-digit returns, prompted by several deals ranging from technology transfer to India to arms manufacturing to strengthening of the Indian defence system under the 'Make in India' banner. Shares of Mazagon Dock Shipbuilders, India’s only shipyard to have built destroyers and conventional submarines for the navy, have gone through the roof, rising 122% so far this year.

Shares of Data Patterns, a vertically-integrated defence and aerospace electronics solutions provider have rallied 87%, Hindustan Aeronautics (HAL) has advanced over 50%, while Bharat Electronics and Garden Reach Shipbuilders & Engineers have surged 26% each on a year-to-date (YTD) basis. Most defence stocks have generated comfortable returns on the government's continued focus on indigenisation, a swelling order book and favourable growth prospects.

Amit Anwani, research analyst at Prabhudas Lilladher, has a positive outlook on the sector for the next 2-3 years. «A major trigger for the pack is favourable defence acquisition policies and clear intent of the government to increase the budget, focus on indigenisation and strengthen supply chains.» Echoing a similar tone, Anil R, research analyst at Geojit Financial Services, said, «The focus on self-reliance has bolstered the sector's long-term outlook.