Mumbai (Maharashtra) [India], September 8 (ANI): Shares of defence companies rallied on Tuesday after the government on Monday cleared defence acquisition proposals worth about Rs 1.10 lakh crore, with 98 per cent of the procurement value earmarked to be sourced from Indian industry.

The development boosted investor sentiment towards the domestic defence sector, as the large procurement approvals are expected to create a strong order pipeline for Indian defence manufacturers.

The Defence Acquisition Council (DAC), chaired by Defence Minister Rajnath Singh, on Monday granted Acceptance of Necessity (AoN), which is the government's in-principle approval to move ahead with various defence purchases for the Army, Navy and Air Force.

The positive sentiment was reflected across the defence segment on Tuesday, with the Nifty India Defence index rising 244.15 points, or 2.50 per cent, to close at 9,998.70.

The entire basket of stocks tracked in the index ended Tuesday's session in the green, with 18 stocks advancing and only one declining, according to NSE data.

Among the major gainers, Mishra Dhatu Nigam (MIDHANI) was the top performer, jumping 12.15 per cent to Rs 470.90. The stock gained Rs 51 during the session.

Data Patterns shares also witnessed strong buying interest, rising 7.61 per cent to Rs 4,940. AxisCades Technologies gained 4.56 per cent to Rs 1,859, while Hindustan Aeronautics (HAL) advanced 3.62 per cent to Rs 5,031.10. Apollo Micro Systems rose 3.60 per cent to Rs 418.50.

The government's decision to source 98 per cent of the approved procurement value from Indian industry is particularly significant for domestic defence manufacturers.

A higher share of local sourcing means a greater portion of government defence spending could flow towards Indian companies involved in manufacturing defence equipment, components, systems and related technologies.

The latest approvals therefore reinforce the government's broader push to reduce dependence on defence imports and strengthen domestic manufacturing capabilities.

The strong performance of defence stocks on Tuesday also came against a weak broader market. The Nifty 50 fell 144.05 points, or 0.61 per cent, to 23,635.10, while the BSE Sensex declined 555.23 points, or 0.73 per cent, to 75,577.58.

The Nifty India Defence index has also delivered strong returns over a longer period. According to NSE data in the snapshot, the index was up 29.40 per cent year-to-date and 32.64 per cent over one year, showing that investor interest in the defence theme has remained strong. (ANI)