India’s defense and PSU stocks are entering 2026 with a strong and optimistic outlook. Government’s heavy capex push, Make in India, indigenisation, rising defense exports and better balance sheets have made the sector bullish.

Momentum remains even after 25–30% PSU rally by 2025. The defense sector is expected to have a CAGR of 12–14% by 2030, while the ₹3 lakh crore+ order book of HAL, BEL and BDL shows 15–20% revenue visibility.

PSU banks, power and energy PSUs are also on strong fundamentals. Risks exist, but the long-term story is based on earnings and capex growth.