Shares of Hindustan Aeronautics (HAL) tumbled 8% to ₹4100.15 in Wednesday’s trading session following reports that the state-owned defence major was not shortlisted to develop and manufacture next-generation fighter jets under the Advanced Multirole Combat Aircraft (AMCA) programme, marking a setback for the company.

The defence stock opened at ₹4,220 in the early morning session on Wednesday, as compared to the previous close of ₹4,470. Soon it declined to the day’s low of ₹4100.15.

Why is HAL share price falling?

According to a report by Hindustan Times, HAL has been eliminated from the race to develop India’s fifth-generation stealth fighter jet under the AMCA programme, marking the first time the state-owned aircraft manufacturer will not take part in one of the country’s most critical defence projects.

HAL has long positioned itself as India’s lead combat aircraft manufacturer. Not being shortlisted means HAL potentially loses a massive, steady revenue stream, thus pressuring the PSU stock.

Besides HAL, the bidders for the programme included Tata Advanced Systems Limited, Adani Defence and Aerospace, Larsen & Toubro (L&T) in consortium with Bharat Electronics Limited (BEL), Goodluck India partnered with BrahMos Aerospace Thiruvananthapuram Ltd and Axiscades Technologies, and Bharat Forge Ltd along with BEML Ltd and Data Patterns, as per the HT report.

Aeronautical Development Agency (ADA) invited EOI for the AMCA programme a few weeks after the defence ministry revealed its much-anticipated roadmap to accelerate the development of the stealth fighter, stating that the execution framework would be competitive and offer a level playing field to both public and private sector players.

The defence minister Rajnath Singh’s approval of the industry partnership model last year came with HAL—India’s only fighter aircraft manufacturer—being widely seen at the time as the leading contender for the project, the report revealed.

The seven applicants were initially assessed by a committee comprising senior officials from the Defence Research and Development Organisation (DRDO), after which the findings were examined by a panel chaired by defence secretary Rajesh Kumar Singh, as per the report.

Under the industry partnership approach being followed by ADA, the EoI specifies that shortlisted companies must have the capability to establish a manufacturing facility for serial production of the AMCA. It also stipulates that the timeline for development, prototyping, flight testing and certification should be capped at eight years.

HAL share price: Technical view

HAL share price has remained under pressure in the near-term. The PSU defence stock has fallen over 10% in the past five sessions and 7% in a month.

Meanwhile, the defence stock has shed 7.23% in six months and 4.27% in terms of year-to-date (YTD). However, the PSU defence stock has given multibagger returns of whopping 731% in five years.

Hitesh Tailor, Technical Research Analyst of Choice Broking, said that HAL is currently trading around ₹4,235, navigating a retracement phase within its broader long-term uptrend.

On the weekly chart, the PSU defence stock is oscillating in a sideways zone between 4,000 and 4,500, and is facing stiff resistance at the 50-week EMA near the 4,450–4,550 range, while the 100-week EMA around 4,100 provides a critical floor that must be sustained to maintain the structural integrity of the trend, as per the expert.

“Momentum remains subdued, with the RSI at 39.87 reflecting a short-term downside bias and a lack of immediate buying pressure. This indicates that the stock is in a “wait-and-watch” phase as it seeks to stabilise near key support levels. A reversal in the RSI toward the 50-60 zone would be necessary to signal a shift back toward positive momentum,” he added.

For a fresh bullish entry, traders should wait for a decisive breakout above 4,500 supported by healthy volume, advised the expert. Sustaining above this level would confirm the end of the consolidation and likely trigger a continuation of the primary uptrend, as per Tailor.

The defence stock hit a 52-week high of ₹5,166 on May 16, 2025, and a 52-week low of ₹3,045 on March 3, 2025.

Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.