New Delhi, Dec. 26 -- After a sharp correction, India's defence stocks are at a crossroads. The Nifty India Defence index has declined by about 15% over the past six months, sharply underperforming the Nifty50's 5% gain.

Frontline defence stocks, including MTAR Technologies, Paras Defence, Bharat Electronics, Bharat Dynamics, Taneja Aerospace and Zen Technologies, are now between 9% and 47% below their 52-week highs.

Even so, institutional signals continue to indicate long-term confidence. HDFC Mutual Fund has resumed systematic investment plan (SIP) registrations in the HDFC Defence Fund as of 23 December, while defence electronics manufacturer Tonbo Imaging has filed its draft red herring prospectus with markets regulator Securities a...