Paris: Shares of French defence giant Dassault Aviation, the manufacturer of Rafale fighter jets reportedly used in India's ‘Operation Sindoor’, saw a significant drop in the European stock market. Meanwhile, Chinese aircraft maker Chengdu Aircraft Corporation (CAC), which supplies Pakistan with J-10 fighter jets, experienced a notable surge in share value.

Dassault aviation sees steep fall

Dassault Aviation’s stock faced a 7 percent intraday drop on Monday, hitting EUR 292. Prices fluctuated throughout the day between EUR 291 and EUR 295.

Reports suggest the downturn followed initial gains after Operation Sindoor, conducted by the Indian Air Force on 7 May. The operation involved precision strikes on terrorist infrastructure located about 200 kilometres inside Pakistani territory. Although there was no violation of Pakistani airspace, Rafale jets armed with SCALP cruise missiles and HAMMER munitions were allegedly used.

Following the operation, Dassault Aviation’s shares had initially risen by 1.75 percent on 8 May, closing at EUR 325.8 on the Euronext Paris exchange. This marked a 66.7 percent gain from its closing value of EUR 195.90 on 31 December. The company also reported robust financials, with annual sales of EUR 6.24 billion and a net profit of EUR 924 million, while the broader French aerospace and defence sector grew by 17.7 percent over the past year, according to Live Mint.

However, over the past five trading sessions, Dassault Aviation’s stock has declined by more than 10 per cent.

Anshul Jain, Head of Research at Lakshmishree Investment and Securities, commented on the market volatility.

“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,” he said.

India's big defence deal with France

India and France recently signed a major defence deal to procure 26 naval variants of Rafale fighter jets for the Indian Navy, valued at approximately Rs 63,000 crore. The aircraft will be deployed on the aircraft carrier INS Vikrant.

The Cabinet Committee on Security (CCS), led by Prime Minister Narendra Modi, approved the government-to-government agreement for 22 single-seat Rafale M fighters and four twin-seat trainers, according to an earlier report by Hindustan Times.

The Indian Air Force currently operates 36 Rafale fighters equipped with HAMMER and SCALP missiles. The Ambala airbase already houses facilities for Rafale maintenance, repairs, training, and simulation.

Chengdu Aircraft Corporation stocks surge

In contrast, shares of Chengdu Aircraft Corporation soared by 20 percent on 12 May, reaching CNY 95.86—a 60 percent rise from the previous week. On 9 May, the stock closed at CNY 79.88, still up 35 percent from its 6 May closing of CNY 59.23, despite some profit-taking sales.

The increase is attributed to the India-Pakistan conflict and the rising attention on Pakistan’s J-10C fighter jets, supplied by the Chinese firm. The J-10C is an advanced version of the J-10, a single-engine lightweight fighter developed by Chengdu Aircraft Industry Group and known by its nickname, “Fierce Dragon” (Menglong).

The J-10’s first flight took place in 1998, and it was officially introduced to China’s People’s Liberation Army Air Force in 2003. The J-10C, featuring advanced electronic systems, was successfully modernised in 2018. Pakistan began receiving exports of the aircraft in 2022.

Market movements reflect geopolitical tensions

The contrasting stock performances of Dassault Aviation and Chengdu Aircraft Corporation mirror current geopolitical tensions and their economic impact.

(Agency inputs)