New Delhi, June 3 -- Defence stocks have been on a blistering rally, with the NSE Defence Index soaring 20 percent in the last one month, vastly outperforming the Nifty 50, which rose by only about 1 percent during the same period. With India sharpening its strategic focus on indigenous defence manufacturing amid global geopolitical tensions, many investors are wondering: Will the bull run in defence stocks continue? While the long-term fundamentals remain strong, market experts warn that valuations have already priced in much of the near-term earnings growth.

The bull case for defence stocks is rooted in a larger geopolitical and policy shift. According to Omniscience Capital, which manages a defence-focused smallcase, the Indian govern...