HAL, BDL, BEL: Higher defence budget may spark fresh rally in related stks

Bharat Dynamics, Hindustan Aeronautics, and Bharat Electronics have skyrocketed 87 per cent, 79 per cent, and 44 per cent, respectively, since Budget 2022

Shares of defence companies will be in spotlight in the run-up to the Budget 2023, with the hopes of increased spending on domestic manufacturing. 

The budget allocation has risen 46 per cent in the last five years, with 3,85,370 crore allocated in the Budget 2022. Through such budgetary initiative, the Government has prioritised the defence sector, encouraging increased private sector involvement.

Among listed players, shares of Bharat Dynamics, Hindustan Aeronautics, and Bharat Electronics have so far skyrocket 87 per cent, 79 per cent, and 44 per cent, each, since Budget 2022.

The period of February 2021 to January 2022 noticed Bharat Electronics outperforming other two by gaining 64 per cent. Hindustan Aeronautics rose 62 per cent, while BDL Bharat Dynamics advanced 54 per cent.

All the three players have seen steep rise in their stock prices since mid-2020. While Bharat Electronics was listed in 1996, this recent upside is the second most favourable rally the stock has seen alongside during 2014-2017.

Here’s the technical outlook of defence stocks ahead of the Budget 2023:-

Hindustan Aeronautics Ltd (HAL)

Outlook: Rs 2,400 stays as the cushion mark

Shares of Hindustan Aeronautics are currently trading beneath the support of Rs 2,596-mark, which is its 50-day moving average (DMA). This implies a negative bias for the stock on immediate perspective. However, the counter is able to reap cushion around Rs 2,400 level. Thus, until this support mark is protected, the positive bias may attempt to overcome the hurdle of 50-DMA. 

A decisive breach below Rs 2,400 may push this stock further lower to Rs 2,200 levels. CLICK HERE FOR THE CHART

Bharat Electronics Ltd (BEL)

Outlook: Support is at Rs 94, an up move over Rs 105 may hit Rs 120 and Rs 125

While there is a formation of “Descending Triangle” on the daily chart of Bharat Electronics, the trend has not yet negated the neckline of Rs 94. Only when the stock dismantles this support mark amid hostile volumes could then trend shift in the bear hands. If that occurs, the stock may slip to Rs 87 and Rs 85 levels. 

On the flipside, a smart recovery over Rs 105 may trigger fresh up move leading a rally to Rs 120 and Rs 125 levels. CLICK HERE FOR THE CHART

Bharat Dynamics Ltd (BDL)  

Outlook: Breakout over the 50-DMA may take stock to Rs 1,000 and Rs 1,100 levels.

The long-term outlook for the Bharat Dynamics shares is intact over the support of the 200-DMA, which was recently tested by the stock. The 200-DMA is placed at Rs 841.50 level. At present, the counter is struggling to absorb all the selling pressure emerging near its 50-DMA currently set at Rs 934.50-mark.

If the stock succeeds in conquering the sell-off and rise over the 50-DMA, the breakout may see a positive rally in the direction of Rs 1,000 and Rs 1,100 levels. CLICK HERE FOR THE CHART