Richly-valued defence stocks extend selloff led by shipyard firms, Paras Defence promoters trim stake

Defence-related stocks experienced a notable decline on May 20, marking the second straight session of losses. The selloff was primarily driven by shipyard firms, which had previously enjoyed substantial gains. Investors appeared to be capitalizing on profits amidst concerns over the sector's high valuations, leading to a broad-based retreat in stock prices. Among the impacted companies, Paras Defence and Space Technologies caught attention as its promoters trimmed their stake, adding to the selling pressure. This move was seen as a strategic step by insiders, possibly aiming to lock in gains after a period of strong performance. The decision fueled further speculation about the sustainability of current valuations within the defence sector. Market analysts suggest that while the short-term volatility might unsettle some investors, the long-term outlook for defence stocks remains robust, driven by ongoing government contracts and geopolitical tensions. However, the recent selloff serves as a reminder of the inherent risks associated with richly-valued stocks, prompting investors to reassess their positions and strategies in the dynamic market landscape.

— Authored by Next24 Live