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Rafale maker Dassault shares plummet; China's Avic Chengdu, manufacturer of J-10, sees stock soar
Dassault Aviation's stock plummeted 7% amid fluctuating prices, following reports of India using Rafale jets in Operation Sindoor against Pakistan.
The stock of Dassault Aviation, the maker of the Rafale jets, which were reportedly used by India during ‘Operation Sindoor’ against Pakistan, has dropped sharply in the European stock market. Dassault Aviation hit a 7 per cent intraday drop on Monday, reaching EUR 292. Throughout the day, the stocks kept fluctuating from EUR 291 to EUR 295.
Meanwhile, shares of Chengdu Aircraft Corporation, the Chinese aerospace company behind the J-10 fighter jets, inducted by Pakistan, surged by 20 per cent on May 12. This marked a significant rise in investor confidence for Chengdu Aircraft Corporation, with its stock reaching Chinese Yuan 95.86, a 60% increase from the previous week.
Live Mint reported that Dassault Aviation shares had surged following Operation Sindoor, a precision strike carried out by the Indian Air Force on May 7, targeting terrorist infrastructure located around 200 kilometres within Pakistani territory.
Some reports claimed that India used Rafale fighter jets armed with SCALP cruise missiles and HAMMER munitions, all while avoiding a violation of Pakistani airspace.
The stock's strong performance aligns with solid financial results. Dassault Aviation posted annual sales of EUR 6.24 billion and a net profit of EUR 924 million, while the broader French Aerospace & Defence sector grew by 17.7 per cent over the past year, Live Mint reported.
However, Dassault Aviation's stock rose 1.75% on May 8 to close at EUR 325.8 on the Euronext Paris exchange, bringing its year-to-date gain to 66.7% from its December 31 close of EUR 195.90.
However, Dassault Aviation stock has fallen over 10 per cent in the past five trading sessions.
Anshul Jain, head of research at Lakshmishree Investment and Securities, told the publication that heightened volatility driven by India-Pakistan news has sent the stock into a downward trend.
“Dassault Aviation share price has tested its swing low support zone of 292–291. A decisive break below this level could quickly drag the stock toward the 260 zone. Caution is advised for long positions. Traders should watch for a breakdown confirmation before considering fresh shorts, as sharp moves are likely. Defensive positioning and tight risk management are key in this environment,” Jain said.
India and France recently signed a key deal to procure 26 naval variants of Rafale fighter jets at a cost of around ₹63,000 crore for the Indian Navy.
India is procuring the jets from French defence major Dassault Aviation for deployment on board aircraft carrier INS Vikrant.
The Cabinet Committee on Security (CCS), headed by Prime Minister Narendra Modi, cleared the government-to-government deal for 22 single-seat Rafale M fighters and four twin-seat trainers this month, Hindustan Times had earlier reported.
The Indian Air Force is already operating 36 Rafale fighters with Hammer and SCALP missiles. India already has base maintenance depots, repairs, training and simulators for Rafales in its Ambala air base.
Stocks of Chengdu Aircraft Corporation
The stock price of Chengdu Aircraft Industries once hit 88.88 yuan in mainland China's stock market. It rose 50% in three days from the closing price of 59.23 yuan on May 6. Chengdu Aircraft Industries returned its gains on May 9 due to profit-taking sales, closing at 79.88 yuan. This is also up 35% from the May 6.
The rise in the Chengdu aircraft industry is attributed to the India-Pakistan conflict.
The J-10C of the Pakistani military is the latest improvement to the J-10. The J-10 is a single-engine lightweight fighter developed by China's Chengdu Aircraft Industry Group, nicknamed the fierce dragon (Menglong).
After completing its initial flight in 1998, it was deployed to the Chinese People's Liberation Army Air Force from 2003. J-10C was successfully electrified in 2018, and exports to Pakistan were made in 2022.
