Synopsis
May 2024, everyone is rushing to buy defence stocks. On the day of election results, they were badly battered. Come July a number of them are higher than what they were on the day of the election results. Come August, they are not performing as well as they were in the first five months of 2024, The result, a narrative on the street starts that they are overpriced and to add icing on the cake, some fund managers make statements about not owning them or that they have booked profit in them. The question to be asked from these so-called alpha fund managers, some of them who run PMS, is whether they bought these defence stocks 5 years back when no one was looking at them or they bought just as they became momentum stocks. Sometimes narratives get formed on the street, which may lead to wrong decisions if one does not question them.
Before you react to news / opinion / narrative and decide on buying / selling/ holding any of the defence sector stocks. A simple question which should be asked. Why did you buy defence stocks ? Because there was momentum in these stocks before June 4th or you thought that defence as a sector will grow further in Modi 3.0. If you bought it for momentum, better sell those stocks because momentum in stocks might slow down as it happens with every
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