Stocks of defence equipment manufacturing companies went through a volatile trade session Thursday, after making healthy gains in the initial trading session on the back of the hike in foreign direct investment (FDI) limit in the sector to 49 percent.
At the Bombay Stock Exchange (BSE), shares of companies like Bharat Electronics, BEML and Astra Microwave Products made healthy initial gains. However, they closed in the red due to profit bookings.
Scrip of Bharat Electronics made initial gains of 1.21 percent at Rs.1,812.95 from its previous day's close of Rs.1,791.20. However, the scrip closed 1.26 percent down at Rs.1,768.60.
Scrip of BEML increased by 1.47 percent at Rs.696 in the afternoon trade session, moving up from Rs.685.90.
The scrip came under selling pressure and closed 1.89 percent down from Rs.672.95.
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Astra Microwave Products which reported a gain of 1.37 percent in the intra-day at Rs.140.25 from its previous close of Rs.138.35, closed 0.69 percent down at Rs.137.40.
The healthy gains for defence equipment manufacturers came a day after the government approved -- with riders -- a proposal to allow 49 percent FDI in the sector.
Foreign capital in defence sector was till now allowed up to 26 percent.
However, the new government led by Prime Minister Narendra Modi gave a push to the sector, as it is trying for defence modernisation and indigenous manufacturing of defence products under the public private partnership (PPP) model.
The move is designed to boost the domestic defence industry of the country. India imports up to 70 percent of its military requirements.
The 2014-15 budget presented in parliament last month hiked the composite cap of foreign investment to 49 percent to be approved through the Foreign Investment Promotion Board (FIPB) route and with control of the enterprise to be in Indian hands.
