Tale of the Tape 

Hiya everyone. Happy Friday!

Markets ended on a green note, with the Nifty and Sensex up +0.3% each. Overall, the Nifty added +1% this week, a recovery from last week’s horror show. Midcaps (-0.3%) and Smallcaps (+0.2%) traded mixed. The advance-decline ratio was split evenly.

Most sectors ended in the green. Pharma (+1.3%) and Auto (+1%) saw the most buying. Metals (-1%) and PSU Banks (-0.9%) were under pressure.

Defence stocks have cooled off from their July highs. Is it time to buy the dip or is there more pain ahead? Read our top story for all the deets.

Our 2025 stock series continues with Axis Securities’s top picks for the new year. More details below.

Listing gains. Mamta Machinery more than doubled investor wealth on listing. DAM Capital closed at Rs 415 p/sh; +47% from its IPO price.

Akums Drugs (+10%) was the top NSE 500 gainer after signing a massive 200 million euro deal with a global pharma major to make formulations for the European market.

Star Cement (+1%) was in focus after Ultratech Cement acquired a 8.69% stake in the firm for Rs 851 cr.

Escorts Kubota jumped +3% after DAM Capital (yeah, the one that got listed) upgraded the stock to “Buy” rating.

Order wins. Cochin Shipyard hit a +5% upper circuit after bagging a Rs 450 cr order from Adani Ports. Gensol Engineering gained +7% after securing a Rs 897 cr EPC contract from NTPC Renewable.

Max Estates rallied +10% intraday before giving up gains after securing Rs 845 cr in pre-sales bookings for its new Noida project.

Here are the closing prints:

Stock
Buy The Dip In Defence Stocks!

2024 was a WILD roller coaster for the defence sector. The first six months of 2024 saw the continuation of last year’s insane bull run. But, since then the NSE Defence Index has corrected by -21%. So what’s ailing the sector and going forward are we headed for further pain or should you buy the dip? Here’s what experts say.

Here’s a quick recap. The election setback raised questions over the GOI’s spending priorities. Actual defence spending also fell (-20% YoY) as a result of lower GOI capex. And finally, execution issues meant some defence companies had meh Q2FY25 results.

What’s changing? In the short-term, most analysts expect spending to pick up from Q4. We already got a taste of this with the Rs 21,772 cr in orders cleared earlier this month. More importantly, key execution hurdles are being cleared. This includes HAL’s delays with receiving GE engines, Bharat Dynamics Akash contract facing supply chain concerns and Mazagon Dock’s submarine orders being deferred.

That said, is this enough? There are two schools of thought here. 

The short-term bear view is that there’s more room for correction. And that any defence spending hike in Q4 + Budget 2025 has already been priced in. The long-term bull view is that the 2023-24 bull run is just Phase 1 of what’s coming for the defence sector. Nuvama estimates the defence growth opportunity at ~$130 billion over the next five years, with Air Force and Navy-focused firms to benefit the most in the medium-term. Philip Capital is also bullish on defence stocks and sees 25% to 30% upside in HAL, Bharat Electronics and Data Patterns.

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