Price Action Overview:
Nifty Defence Index displayed resilience on the weekly chart during the first week of March 2026 when most sectoral indices ended in the red, yet the index advanced 4.89%. The move came during an extreme volatile week with IndiaVIX surging 45% and Brent Crude jumping 27% amid escalating tensions between the U.S.–Israel and Iran. Technically, the 8,300 level acted as a major resistance since July 2024, and the index declined nearly 40% from its July high. The index tested the 8,300 resistance again but initially failed to close above it. However, it has now broken out above the 8,300 level, ending the seven-month consolidation range of 7,400–8,300. This week, the index retested its breakout level and confirmed the continuation of the uptrend. Importantly, the price respected the 50-day EMA and took support last week, reinforcing the ongoing uptrend. The 7,400 region continues to act as a strong demand zone since August 2025, where repeated pullbacks found buyers, sustaining the broader uptrend. Weekly RSI (14) is trending higher at 60, indicating strengthening bullish momentum, while the index is trading comfortably above both the 50-day EMA (8,022) and 200-day EMA (7,780), reinforcing the continuation of the broader uptrend.
Trend Analysis:
From March to June 2025, the Nifty Defence Index witnessed a powerful rally, surging nearly 80% in a strong bullish trend. After reaching its peak in June, the index corrected only about 12% in July, indicating limited profit booking despite the sharp prior rise. Instead of a deeper decline, the index moved into a broad consolidation phase from August 2025 to February 2026, oscillating between the 7,400 support zone and the 8,300 resistance band. Structurally, this consolidation represents roughly a 15% retracement of the preceding rally, signalling a healthy correction. The recent breakout & retest above 8,300 breakout level indicates strengthening momentum and suggests a potential continuation of the broader uptrend.
Industry Analysis:
India’s defence manufacturing sector is witnessing strong structural growth driven by rising security needs, policy support, and increasing export opportunities. Demand is accelerating amid heightened national security concerns, with 700 industrial licences issued and 436 companies actively operating in the sector by March 2025. Export momentum has been particularly strong, with defence exports rising from Rs. 686 crore in FY14 to Rs. 23,622 crore in FY25, reflecting a remarkable 34% annual growth rate. Domestic production has also expanded significantly, reaching Rs. 1,50,590 crore in FY25, up 18% year-on-year and 90% compared to FY20. Government policy remains a major catalyst, with the FY26 defence budget allocating Rs. 6,81,000 crore, a 9.5% increase over FY25, alongside initiatives such as the SRIJAN portal promoting indigenisation. Strategic initiatives including Defence Industrial Corridors in Uttar Pradesh and Tamil Nadu and growing private sector participation are strengthening the ecosystem. With strong export demand and localisation, the domestic defence market could expand to Rs. 10,00,000 crore over the next two decades.
Leading Picks in the Defence Space:
- BEL.
- DATAPATTNS.
- SOLARINDS.
Conclusion:
The Nifty Defence Index shows renewed strength after breakout & retest above the key 8,300 resistance, signalling a continuation of the broader uptrend. Holding above this level keeps the overall structure positive, while a breakout above the 9,195 lifetime high could lead to further upside. However, if the index falls below the 7,400 support zone, the trend may turn bearish and could trigger increased selling pressure.
Key supports: 8,300 / 8,000 / 7,700 / 7,400.
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