Stocks of Avic Chengdu Aircraft, which is a Chinese defense company famous for manufacturing J-10 fighter jets operated by Pakistan in its war with India, plunged almost 12 percent.
The sharp fall was preceded by the speech of Prime Minister Narendra Modi commemorating the successful conduct of 'Operation Sindoor,' which was a major victory for India.
While Indian defense stocks witnessed a good rally, Chinese defense companies witnessed big selloffs during the week.
Since its Monday close of 95.86 yuan, Avic Chengdu Aircraft shares have fallen more than 11.5 percent.
Thursday closed at 85.20 yuan, low intra-day at 85 yuan, down more than 11.5 percent in three consecutive sessions.
Previously, stocks of Zhuzhou Hongda Electronics Corp Ltd, a Chinese defense company that manufactures the PL-15 missile, also plummeted after India's air defense systems successfully intercepted and shot down the missile during the confrontation with Pakistan.
The share drop occurred after Indian defense authorities formally declared that the PL-15 missile, which was provided to Pakistan by China, was unable to penetrate India's multi-layered air defense system.
The PL-15 beyond-visual-range (BVR) air-to-air missile employed on JF-17 and J-10 fighter jets of Pakistan was effectively neutralized by Indian indigenous defense systems.
The interception is causing concerns regarding the operational reliability of Chinese missile technology, which could have been one of the factors that led to reducing investor confidence in Zhuzhou Hongda.
Before the ceasefire, Chinese defense shares had gained on speculation that Beijing would strengthen its role as a main arms supplier to Pakistan if the war gathered momentum.
On the contrary, India's defense sector has seen a sensational increase in market capitalization, gaining approximately Rs 86,211 crore since the Pahalgam terror attack that killed 26 individuals.
The Nifty India Defence Index, the benchmark of blue-chip defence stocks, has increased by 9.39 percent since the start of the military action, light years ahead of the broad Nifty benchmark that rose a paltry 1.98 percent in the same duration.
This increase is also visible in the contribution of major companies to the market value: BEL has contributed Rs 23,683 crore, HAL added Rs 21,654 crore, and Bharat Dynamics have contributed Rs 12,345 crore.
Major contributors are Solar Industries and Mazagon Dock Shipbuilders, contributing Rs 6,859 crore and Rs 9,971 crore respectively to the industry's market capitalization as a whole.
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