Defence Sector Faces Profit Booking After Rally

Defence sector stocks experienced a downturn on Thursday, with the Nifty India Defence Index dropping 2%, underperforming the broader Nifty's 0.5% decline. Out of the 18 stocks on the defence index, 16 closed lower, signaling a broad retreat.

Key Losers and Analyst Insights

Bharat Dynamics led the losers, falling 4.8% after Motilal Oswal initiated coverage with a 'neutral' rating. Other significant decliners included Solar Industries and Zen Technologies. Analysts attribute the correction to stretched valuations and easing geopolitical tensions, suggesting the rally may have outpaced fundamentals.

Long-Term Growth Prospects Remain Strong

Despite the current pullback, fund managers express optimism about the sector's long-term growth, citing potential order inflows and export opportunities. A buy-on-dips strategy is recommended, with expectations of sideways trading in the near term.