New Delhi, July 20 -- The rally in defence stocks has shown little sign of losing steam. Having outperformed every year since the pandemic, the sector has extended its winning streak into 2026, with the Nifty Defence index up nearly 20% year to date against an 8% decline in the Nifty 50.

Renewed conflict in West Asia has added fresh fuel to the rally, reviving optimism around defence stocks and India's push for self-reliance. The question now is what drives the next leg: more orders or better execution?

"Since the beginning of 2026, the Nifty India Defence Index has witnessed an upward re-rating of 9.2% (with the index P/E expanding from 51.8x to 56.5x), while the broader Nifty 50 Index has undergone a de-rating (-8.8% with Nifty 50 ind...