Tensions between India and Pakistan increase: defense stocks hold steady while textile and banking stocks decline
Indian markets experienced pressure on May 9 due to the ongoing escalation of tensions between India and Pakistan. Recently, investors' attention has been focused on defense, while several textile firms saw profit-booking, and banking stocks experienced pressure following large overnight drops in HDFC Bank and ICICI Bank's American Depository Receipts (ADRs).
They responded as follows:
Defense stocks: As tensions between India and Pakistan increased on May 9, shares of Hindustan Aeronautics, Bharat Dynamics, and Bharat Electronics jumped between 1% and 2%. Over the previous month, the stocks have increased by up to 12 percent. As tensions with Pakistan worsen, investors are returning to this sector in the hopes that the government will increase defense spending.
Any increase in conflict typically increases interest in defense companies because India and Pakistan are neighbors with nuclear weapons and a long history of border disputes. Since the market anticipates increased demand for defense contracts and production, these companies are viewed as important investment potential.
"We've been called to Delhi next week," Baba Kalyani, the chairman and managing director of Bharat Forge, told CNBC-TV18. Our group is moving forward. I have nothing more to say. The Kalyani Group produces a broad variety of defense hardware, including as missiles, ammunition, protected and armored vehicles, artillery systems, air defense systems, and defense electronics. The other defense corporations that have been invited to meet in New Delhi are still unknown.
Pakistan resumed intense firing across the Line of Control (LoC) in Poonch, Rajouri, Uri, and Chowkibal Kupwara early this morning. One woman was allegedly slain in Uri, while several homes in Chowkibal Kupwara and Uri were damaged.
This followed India's announcement that it had "neutralized" several Pakistani drone and missile assaults that targeted military targets in Jammu and Pathankot. Fifteen areas in the country's north and west had similar attack attempts thwarted.
Textile stocks: Some profit-booking was seen in textile stocks on May 9, with SP Apparels, Gokaldas Exports and Arvind down 2 percent each after these shares surged up to 17 percent two days back following India’s free trade agreement (FTA) with the UK.
The FTA is seen as a big boost to the Indian textile sector’s competitiveness in the UK market. It provides tariff concessions that were previously unavailable. Indian textile exports such as women’s clothing, shirts, trousers, and bed linens—which currently face a 10 to 12 percent import duty in the UK—are expected to benefit from the deal.
Banking stocks: The banking sector came under spotlight on May 9 after ADRs of HDFC Bank and ICICI Bank fell more than 4 percent each overnight. HDFC Bank, which holds around 13 percent weight in the Nifty, slipped nearly a percent, while ICICI Bank also saw decline of over a percent. HDFC Bank stock has already climbed around 9 percent in the past month after a strong March quarter performance. ICICI Bank has shown a similar gain of about 9 percent during the same period.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
They responded as follows:
Defense stocks: As tensions between India and Pakistan increased on May 9, shares of Hindustan Aeronautics, Bharat Dynamics, and Bharat Electronics jumped between 1% and 2%. Over the previous month, the stocks have increased by up to 12 percent. As tensions with Pakistan worsen, investors are returning to this sector in the hopes that the government will increase defense spending.
Any increase in conflict typically increases interest in defense companies because India and Pakistan are neighbors with nuclear weapons and a long history of border disputes. Since the market anticipates increased demand for defense contracts and production, these companies are viewed as important investment potential.
"We've been called to Delhi next week," Baba Kalyani, the chairman and managing director of Bharat Forge, told CNBC-TV18. Our group is moving forward. I have nothing more to say. The Kalyani Group produces a broad variety of defense hardware, including as missiles, ammunition, protected and armored vehicles, artillery systems, air defense systems, and defense electronics. The other defense corporations that have been invited to meet in New Delhi are still unknown.
Pakistan resumed intense firing across the Line of Control (LoC) in Poonch, Rajouri, Uri, and Chowkibal Kupwara early this morning. One woman was allegedly slain in Uri, while several homes in Chowkibal Kupwara and Uri were damaged.
This followed India's announcement that it had "neutralized" several Pakistani drone and missile assaults that targeted military targets in Jammu and Pathankot. Fifteen areas in the country's north and west had similar attack attempts thwarted.
Textile stocks: Some profit-booking was seen in textile stocks on May 9, with SP Apparels, Gokaldas Exports and Arvind down 2 percent each after these shares surged up to 17 percent two days back following India’s free trade agreement (FTA) with the UK.
The FTA is seen as a big boost to the Indian textile sector’s competitiveness in the UK market. It provides tariff concessions that were previously unavailable. Indian textile exports such as women’s clothing, shirts, trousers, and bed linens—which currently face a 10 to 12 percent import duty in the UK—are expected to benefit from the deal.
Banking stocks: The banking sector came under spotlight on May 9 after ADRs of HDFC Bank and ICICI Bank fell more than 4 percent each overnight. HDFC Bank, which holds around 13 percent weight in the Nifty, slipped nearly a percent, while ICICI Bank also saw decline of over a percent. HDFC Bank stock has already climbed around 9 percent in the past month after a strong March quarter performance. ICICI Bank has shown a similar gain of about 9 percent during the same period.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Comments
Post a Comment