HAL, BEL, BDL, Mazagon Dock, Paras Defence In Focus: Will Defence Stocks Rise Or Fall After US-Israel-Iran War

Defence stocks are back in focus as the US and Israel join forces against Iran. What started as nuclear deal talks between the US and Iran escalated on February 28 into a full-blown war. The impact has been fatal, resulting in the death of many leaders of the Islamic Republic Regime, including that of its supreme leader, Ali Khamenei. Geopolitical tensions in the the Middle East have been at the knife's edge since October 2023, when Israel declared war against Hamas in Gaza, a proxy funded by Iran. And any geopolitical scenario brings back the attention on aerospace and defence stocks.

Will US-Israel Strike On Iran Drive Defence Stocks?

As per experts, the strike of US and Israel on February 28 has brought an even bigger spotlight on defence stocks than any other geopolitical tensions since Russia-Ukraine war started in 2022.

According to Jurica Dujmovic, a columnist at MarketWatch, defense stocks have been treated as a geopolitical barometer. When tensions rise and military conflict breaks out, shares climb. When headlines cool, the trade fades. It's a narrative built around procurement cycles and crisis-driven spending. The attack on Iran on Saturday by the U.S. and Israel should repeat this pattern for defense stocks in coming days.

But something more structural and long-term has been unfolding, which as per the report is something that looks far less like a one-off weapons sale and more like a long-term service contract. Parts of the defense industry are beginning to resemble subscription businesses, recurring revenue layered on top of a growing installed base.

To investors, the report stated that focus on earnings durability rather than war headlines, that distinction matters.

World's Largest Defence Stocks:

Currently, six US defence companies are in the top 10 list of the world's largest defence contractors by market cap. At the top of the list is RTX with $271.97 billion, making it the largest defence contractor. Honeywell, at third rank, holds a market cap of $164.14 billion, followed by Lockheed Martin at fourth with a market cap of $152.27 billion, Northrop Grumman at fifth with a market cap of $103.38 billion, and General Dynamics at sixth rank with a market cap of $96.54 billion as of February 27, 2026. Another US-based company is L3Harris Technologies at the ninth rank with market cap of $68.18 billion.

US Defence Stocks Outperformed

The prediction of war between the US and Iran has been discussed over the past few weeks. Just a day before the US and Israel bombarded Iran with air missiles, US defence stocks rallied and outperformed European defence stocks.

For instance, the above-mentioned top US defence stocks surged by 2% to 3% on February 27, while Safran which is a France-based second largest defence contractor in the world with market cap of $167.43 billion, declined by nearly 2%. Meanwhile, Germany-based Rheinmetall and UK-based BAE Systems fell by 0.3% to 0.8% in the last session. They are also in the top 10 list.

In India, three defence stocks which are Maharatnas and government-backed are in the top 35 list of largest defence contractors. Two of them are under top 20. These are Bharat Electronics (BEL), Hindustan Aeronautics (HAL) and Bharat Dynamics.

HAL vs BEL Vs BDL

As of now, BEL is the largest defence player of India and fifteenth largest defence contractor in the world with market cap of $35.70 billion, followed by HAL at nineteenth rank with m-cap of $28.74 billion. BDL is at the 34th position with market cap of $5.09 billion.

These three stocks fell by 1% to 2.5% last week on Friday alone.

Hence, it will be keenly watched if Indian defence stocks follow the trend of US defence stocks on Monday, March 2, 2026.

Defence Stocks Performance:

Nifty India Defence index ended the month of February on a positive note. Currently, the index is at 8,126.80, registering an upside of 6.41% in 1 month. However, on February 27th alone, the index was down by 1.06% but still managed to end the month on a positive note.

Gainers & Losers:

In past 30 days, BEL stock has surged by 6.3%, outperforming BDL and HAL who dropped by 10.07% and 13.96%. Meanwhile, Cyient DLM also plunged by over 10.3%, followed by Mazagon Dock who slipped by 4.71%, Paras Defence & Space who tumbled by 2% and Cochin Shipyard which shed nearly 1.4% in a month.

Among gainers, apart from BEL, were MTAR Technologies who emerged as the best performer with a whopping 51.10% surge in 1 month, followed by Data Patterns with 39.20% rise, Bharat Forge with 34.6% gains, and Dynamatic Tech with 26.34% rally. Other socks like Astra Micro rose by 6.5%, Solar Industries advanced by 6% and Unimech Aerospace zoomed by 9%. Also, Midhani, GRSE and Zen Tech gained by nearly 2% each.

Defence stocks have seen a favourable buying sentiment over the past few years due to the government's focus on strengthening its defence spending, record-high budget allocations and targeting Rs 50,000 crore export.

For FY27, the government declared an record-breaking budget allocation of Rs 7.85 lakh crore for defence sector.

Defence Stocks To Buy:

Choice Broking has recommended BUY on seven defence stocks.

Apollo Micro Systems: BUY for Rs300 Target.

Azad Engineering: BUY for Rs 1,900 Target

Bharat Dynamics: BUY For Rs 1,965 Target

Bharat Electronics: BUY For Rs 550 Target

Centum Electronics: BUY For Rs 3,000 Target

Data Patterns: BUY For Rs 3,600 Target

Hindustan Aeronautics: BUY For Rs 4,780 Target

Zen Technologies; BUY For Rs 2,150 Target

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