Defence funds in July 2026: up 19% this year

A sector index far from the market

On Wednesday, 29 July 2026, the Nifty India Defence closed at 9,221.30, up 19.02% for the year on price. The Nifty 50 was down 7.19% over the same months.

The index's longer record is steeper still. Our data starts on 19 January 2022, with the index at 1,380.29. It has since multiplied by about 6.7 times. Over the past three years its estimated total return was 46.94% a year.

There are six defence funds with NAVs, and only one of them is actively managed. The other five track an index, three as index funds and two as funds of defence ETFs. All figures are for the Direct plan, Growth option, from NAVs to 29 July 2026. Returns under a year are absolute; a year or more, annualised.

The six funds

The index estimate adds NSE's daily dividend yield to the price index, as we don't hold the official total return series.

HDFC Defence beat the index this year and over one year, by about five and seven points. Over three years it trailed: 39.41% a year against an estimated 46.94%.

The three index-tracking funds with a one-year record finished between 0.52 and 0.90 points behind our index estimate.

Two large falls in four years

The steep rise was not a straight line.

From the 30 March low the index rose to a record 9,728.70 on 22 June. On 29 July it was 5.22% below that record.

HDFC Defence's worst fall over its three years was 34.54%, and its annualised volatility 25.92%. The median flexi-cap fund's volatility over the same three years was 14.18%. The defence index funds, with about two years of history, show volatility near 28%.

Next to the market

The price of the rise

The index's P/E closed at 55.77 on 29 July. In January 2022 it was 23.14. Across our full record for this index, from January 2022, the median P/E has been 46.45 and the range 18.85 to 73.36. The highest reading came on 11 July 2024, the day of the peak before the 38% fall.

The index's P/E history is short, and it starts after NSE moved to consolidated earnings, so all of it is on the same basis.

What this does not tell you

A narrow theme, a short record. One active fund and four years of index history make a thin base. Three-year returns near 47% a year are not a rate anyone should extrapolate.

The P/E is not a timing signal. A high ratio says investors are paying a lot for current earnings. It says nothing about when, or whether, that changes.

This is not a recommendation. Nothing here is advice to buy or sell any fund named.

Where to go from here

The defence index funds are on the index fund page, and the active fund on the sectoral and thematic page. Sectoral and thematic funds covers the risks of a one-theme holding, and index funds and ETFs the passive route.

For another theme set against its index this month, see infrastructure fund returns in July. For where every NSE sector index stood on valuation at mid-year, see the cheapest and dearest NSE indices.