As India-Pakistan tensions rise, are defence stocks worth a look? DSP’s Vinit Sambre weighs in

Rising border tensions between India and Pakistan have brought defence stocks into focus. But are they worth adding to your portfolio now? Vinit Sambre, Head of Equities at DSP Mutual Fund, which manages nearly $22 billion in assets, believes the recent rally is being driven more by sentiment than fundamentals, and investors should tread carefully.

“In terms of valuations, [defence stocks] may not be absolutely reasonable or cheap,” Sambre said in an interview with CNBC-TV18.

He explained that while the order book momentum and strong government focus have helped these stocks, long execution timelines could delay earnings visibility. “These companies keep facing challenges… maybe slower execution,” he added.
Catch live updates on India-Pakistan War 

Sambre doesn’t rule out further near-term gains in defence stocks, especially as positive news flow continues.

But he cautioned that once the current narrative fades, the market will return to examining core fundamentals. “If somebody owns defence stocks in the portfolio, it may be good to ride as of now with the sentiment… but at a certain price point, one should think of taking money off.”

Sambre struck a cautious tone on the broader market. He pointed to muted earnings and weak commentary from companies, saying, “We are at single-digit kind of growth rates… and companies are not giving out great commentaries as of now because the environment is a bit uncertain.” He expects the current volatility to persist until factors like US tariff uncertainty and regional conflict are resolved.

However, he sees these as opportunities for long-term investors. “These volatile times should be used more to build equities gradually rather than aggressively. The time horizon should be really beyond three to four years,” he advised.

Also Read: Fact Check–a list of fake news on India-Pakistan war

Among other sectors, Sambre is bullish on consumption, especially discretionary categories such as autos, retail, and quick-service restaurants (QSRs). “We believe in the consumption story. It’s at a low cycle. Hopefully, the second half should turn out to be better for some of these companies,” he said, pointing to government welfare schemes, tax benefits, and a potential pay commission boost as triggers.

Pharma and healthcare are also on his radar. While regulatory concerns in the US could impact export-focused drugmakers, Sambre believes India’s cost advantage and chemistry expertise give it a strong foundation.