Key Details:

  • Scheme: Defence Dynamics StockBucket
  • Subscription charges: ₹499/-
  • Managed By: Elite Wealth Research
  • Volatility: Med. Volatility
  • Minimum Investment: ₹ 17,000/-

Looking to invest your money, but not sure where to start? Consider a portfolio of defence stocks! India’s defence manufacturing industry is a significant contributor to the economy and aims to reduce external dependence on defence procurement. The Indian government has taken several initiatives to encourage ‘Make in India’ activities to modernize its armed forces. India has been among the top importers of defence equipment to gain technological advantages over rival countries such as China and Pakistan. The Indian government has set a defence production target of $25 billion by 2025, including $5 billion from exports by 2025. India is one of the world’s biggest defence spenders, with a total outlay of ₹ 5.25 lakh crore (US$ 66 billion), accounting for 13.31% of the total budget. Here are some of the benefits of investing in defence stocks:

  • Investing in defence stocks can provide investors with stable earnings and consistent dividend payouts.
  • The defence industry requires a significant amount of capital, expertise, and regulatory approvals, which can create high barriers to entry for new players.
  • With increasing geopolitical tensions, the demand for defence products is likely to grow, providing growth opportunities for defence companies.
  • Investing in defence stocks can provide diversification to an investor’s portfolio, as defence companies operate in various segments such as aerospace, land systems, naval systems, and cybersecurity, providing exposure to different markets and geographies.
  • Defence companies often have long-term contracts with governments, providing them with a stable revenue stream and a high degree of visibility into future earnings.
  • The defence industry is typically less impacted by economic cycles due to its essential nature, providing a degree of stability to investors.
  • The defence industry is often at the forefront of innovation, with companies investing heavily in research and development to create new products and technologies. This can provide growth opportunities for investors.
  • The defence industry is often seen as a defensive sector, providing a degree of protection to investors during times of market volatility.

India ranked 19th in the list of top defence exporters in the world in 2019, exporting defence products to 42 countries. Defence exports grew by 334% in the last five years, and India now exports to over 75 countries. The Defence Ministry has set a target of 70% self-reliance in weaponry by 2027, creating huge prospects for industry players. The Indian government’s emphasis on easing restrictions on foreign investment to achieve India’s goal of an “Atmanirbhar Bharat” indicates a strong growth trajectory for the Indian defence sector.

  • Defining the universe: All publicly traded companies on the National Stock Exchange of India are included in the universe.
  • Research: The Elite Wealth Research team does in-depth research, along with internal presentations, and decides the criteria to be used for constituent screening.
  • Historical back-testing: Defence Dynamics StockBucket by the Elite Wealth Research Team is checked for historical outperformance to ensure that only consistently outperforming strategies are selected.
  • Stock Screening: The stock screening is done through the B.I.G.P.I.C. stock selection process which is as follows:
    • Broader Markets: No stock decision is taken without domestic and Global economic considerations
    • Industry Analysis: The focus is to follow a top-down approach to pick the Leaders from the outperforming Industries.
    • Growth Trajectory: Elite’s radar stretches to only those companies that have shown quarterly growth (y-o-y) as well exponential Annual Growth in EPS.
    • Promoter and Management: Study of the Promoters and the Board of Directors.
    • Institutional Backing: More weightage is given to sectors targeted by MFs, AMCs, Banks, etc.
    • Charts and Technicals: Entry into positions will be well-timed and technical indicators will be used to support our investment theory
  • Weighting: The list of selected stocks is weighted such that the risk contribution of each stock in the StockBucket is equal. By focusing on risk instead of market cap or value, this weighting scheme provides better diversification and protection against market volatility
  • Rebalance: This StockBucket is rebalanced as and when required.
  • Stocks: 8
  • Rebalance Frequency: As per the requirement

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