The Nifty India Defence Index has recently witnessed a sharp 15% decline from its all-time high recorded in June 2025. This correction has dragged the 14-day Relative Strength Index (RSI) of the index below 30, marking its lowest point since inception and indicating a move into oversold territory. As of July 29, nearly 50% of the index constituents are now in the oversold range, raising questions about whether a buying opportunity is emerging.
On July 29, Indian benchmark indices, the Nifty 50 and Sensex, extended their losing streak for a third consecutive session. The Nifty 50 fell below the 24,800 mark, while the Sensex slipped past 81,500. Despite this correction, the RSI for these indices hasn't yet dropped below 30. However, the Defence Index stands out as it not only breached this threshold but also fell below its short-term 20-DMA and 50-DMA levels.
The Nifty India Defence Index had shown remarkable strength following India’s launch of 'Operation Sindoor' on May 7, 2025, in response to the Pahalgam incident. The index surged approximately 35% over the next 52 sessions, peaking at 9,195.15 on June 6. During this period, all constituent stocks delivered gains, led by GRSE (up 63%) and Ideaforge Technology (up 55%).
| Stock | % Change (May–June) |
| GRSE | 63.02% |
| IDEAFORGE | 55.09% |
| MIDHANI | 42.68% |
| ZENTEC | 42.14% |
| COCHINSHIP | 41.26% |
| ASTRAMICRO | 37.66% |
Following the recent decline, several stocks from the index have entered technically oversold territory. These include HAL, BDL, Cochin Shipyard, and Ideaforge Technology. Their RSI readings have dropped below 30, a level that typically signals potential price exhaustion on the downside.
| Stock | RSI on May 7 | RSI on July 28 |
| HAL | 60.98 | 29.88 |
| BDL | 55.43 | 28.28 |
| IDEAFORGE | 45.80 | 24.04 |
| MAZDOCK | 53.88 | 25.79 |
| ZENTEC | 45.84 | 29.18 |
All 15 stocks in the Nifty India Defence Index now have RSI levels lower than they did post-'Operation Sindoor,' highlighting the breadth of the correction.
In July 2025, the Defence Index underperformed the broader markets. It fell 11.65% during the month, whereas the Nifty 500 declined by only 3.49%. This shows a notable shift in sentiment toward the defence sector.
Though an RSI below 30 often points to oversold conditions, it should not be used in isolation for investment decisions. RSI can remain low for extended periods. However, technical observers are watching closely as the index nears a key support level aligned with the 61.8% Fibonacci retracement of the May–June rally. A potential reversal could be confirmed if the index starts forming higher lows and the RSI crosses above its 9-day moving average.
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