Shares of ten defence equipment makers rose by 1.43% to 5.74% at 14:15 IST on BSE on expectations of increase in budgetary allocation to defence sector in Union Budget 2015-16 tomorrow, 28 February 2015.
Meanwhile, the S&P BSE Sensex was up 369.04 points or 1.22% at 29,115.69.
Among defence stocks, Pipavav Defence and Offshore Engineering Company (up 3.34%), BEML (up 1.43%), Bharat Electronics (up 4.45%), Astra Microwave Products (up 5.74%), Punj Lloyd (up 3.6%), Taneja Aerospace (up 1.9%), and Walchandnagar Industries (up 1.79%) edged higher.
Finance Minister Arun Jaitley will present Union Budget 2015-16 in the parliament tomorrow, 26 February 2105. Finance minister could offer some incentives to Indian firms to encourage domestic manufacturing under the aegis of the 'Make In India' programme. There has been a spike in the interest in Indian companies to participate in defence manufacturing.
To attract foreign companies to set up their plants in India, the government last year hiked foreign direct investment in the defence sector to 49% from 26%.
Mahindra & Mahindra (M&M) rose 2.39%. With respect to media reports titled Mahindra & Mahindra is in talks with British Aerospace for an alliance, M&M during market hours today, 27 February 2015, clarified that the report is highly speculative in nature and there are no arrangements which the company has entered into.
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In a separate announcement, with respect to media reports titled M&M wants to milk dairy sector; eyes up to Rs. 750 crore buyout, M&M during market hours today, 27 February 2015, clarified that the article referring to a senior official of the company commenting about the investment size, brand name and supply chain on the sidelines of a CII organized SME summit is incorrect. The contents in the report are very generic in nature and the company will not be in a position to comment on the same, M&M said. Media reports had quoted a senior official of the Mahindra Group firm on 25 February 2015 as saying that the group can invest anything between Rs 150 crore and Rs 750 crore to enter dairy sector.
L&T (up 3.96%) and Tata Power Company (up 4.77%) gained. Tata Power Company announced after market hours yesterday, 26 February 2015 that its Strategic Engineering Division (Tata Power SED), in a consortium with L&T, is one of the two down-selected Development Agencies for Ministry of Defence's prestigious "MAKE" Program "Battlefield Management System (BMS)". Tata Power SED is the lead of the consortium.
BMS is a Network Centric Program being indigenously developed for the Indian Army under the MAKE category of Defence Procurement Procedure. It is the second such Program that Tata Power SED and L&T are collaborating for. In next 5-7 years, when BMS will be deployed by the Army, it will cover more than 70% of soldiers while digitizing the Tactical Battlefield and creating a secure IoT (Internet of Things) for the Army.
The down-selection of Tata Power SED - L&T consortium enables it to participate in the Prototype Development Phase of this MAKE Program followed by a Production Order, which will be decided by the MoD after successful completion of the Prototype. Tata Power SED is one of the few private companies with a track record of over four decades in Defence R&D and Production. Project BMS is of special importance as it gives an opportunity to serve a very large section of the Indian Army.
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