It Makes Perfect Sense to Look at Defence Stocks Now

Oct 21, 2020

Editor's note: Join Tanushree Banerjee, tomorrow at the Explosive Profits Summit where she will show you how to invest in the best defence stocks in India. Register for free here...


Why do politicians usually make bad decisions?

Is it because they enjoy doing so? Sounds crazy right.

I mean, people would like them if they made good decisions

A very important thing that influences our decisions is incentives.

A politician's incentive is only to get re-elected.

Or to make money when he is in power.

These things influence every decision he takes. The masses get lucky only when his incentive aligns with theirs once in a while.

It happened in 1991 in India...and it created a huge wealth-building opportunity.

At that time, we were going through a huge economic crisis. The government was close to defaulting.

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The central bank refused to lend credit to the government. Our foreign exchange reserves were drying up.

Firmly forced in a corner, the incentive for the government was clear. They had to do something big to survive.

This strong incentive resulted in India's biggest economic reforms.

This is exactly what I am seeing in our defence sector right now.

I see an opportunity to create immense wealth.

Here's why...

According to a SIPRI (Stockholm International Peace Research Institute) report, India was the third largest military in the world in 2019.


If you look at the chart closely, you will realise it is likely to remain among the top spenders in the coming years.

It's because of the second largest spender shown in the chart, China.

With rising tensions between the two countries, the incentive is strong for India to keep up with China.

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Today, we are seeing an economic crisis on a global scale.

Countries need to efficiently manage resources to survive this difficult phase. In that sense, it makes perfect sense for India to look local.

The third biggest military spender in the world can't afford to keep relying on imports. The incentive is pretty strong to look at local players for defence supplies.

You could see that with the recent import embargo on 101 defence items. These 101 items will now be purchased locally instead of foreign players.

I believe this is just the start.

It all makes sense for the government to focus on this sector in a big way in the near future.

The government's 'Atmanirbhar' push will get a massive boost through local defence manufacturing. This will create profitable opportunities in defence stocks for astute investors.

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Is the inflection point for defence stocks then getting closer?

My colleague Tanushree certainly thinks so. She recently spoke about the defence opportunity in her recent video...

Lastly, it is a sector as critical as any to India.

Recent border tensions with our neighbors have been on the rise. The government has a big incentive to prove its competence in a sector that is always in the limelight.

When the incentive is big, the profit-making opportunity in defence is also huge.

Warm regards,

Girish Shetty
Girish Shetty
Research Analyst, Hidden Treasure
Equitymaster Agora Research Private Limited (Research Analyst)

PS: Join Tanushree Banerjee, tomorrow at the Explosive Profits Summit where she will show you how to invest in the best defence stocks in India. Register for free here...

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1 Responses to "It Makes Perfect Sense to Look at Defence Stocks Now"

SANJAY KUMAR PANDEY

Nov 17, 2020

yes

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