As countries across the globe brace for potential future uncertainties, the defence sector has gained significant prominence. More so after Russia invaded Ukraine.
The emerging theme playing out has not only geopolitical implications but has also ignited interest in the stock market, particularly in the realm of penny stocks.
Penny stocks often exhibit swift and dramatic price movements compared to their larger counterparts. This accelerated momentum can be attributed to their lower market capitalization, making them more sensitive to market shifts.
With the defence theme gaining traction, penny stocks within this sector are positioned to experience sharper price fluctuations, presenting both opportunities and risks.
At present, there aren’t many penny stocks operating primarily in the defence space. Setting up factories and plants for defence requirements needs huge capital allocation and smaller companies sometimes find it difficult to fund their projects.
You can check the list of defence stocks here.
Note that governments across the globe have a big role to play in this. In India, along with the 'Make in India' initiative, the centre is boosting its defence budget and developing its indigenous defence manufacturing capabilities.
That is why the sector has expanded in recent years and is well-poised to grow in the near term.
However, before you invest in defence stocks, it is essential to understand the industry's dynamics and the risks that comes with it.
For more details on defence stocks, check out our guides on how to invest in defence stocks and defence stocks: all your questions answered.
You can also get started by using Equitymaster's stock screener to filter the best defence stocks in India.
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