Why Railway Stocks Are Soaring: IRCTC, RVNL, and IRFC Lead the Charge

Despite the overall sluggishness in the Indian stock market today, railway stocks have surged impressively since the market opened. Major Indian Railway companies such as Ircon International, Rail Vikas Nigam Limited (RVNL), and Indian Railway Finance Corporation (IRFC) have seen significant gains. Indian Railway Catering and Tourism Corporation (IRCTC) also reported a nearly 2 percent increase in its share price. RVNL shares reached new heights with an over 12 percent intraday rise, while IRFC shares hit a new peak of ₹206, climbing by about 9 percent intraday. Ircon shares also soared to a record high of ₹334.50 apiece on NSE, showing a rise of more than 7 percent.

Why Are Railway Stocks Surging?

Experts attribute Monday’s surge in railway stocks to recent announcements from the Minister for Railways, Ashwini Vaishnav. He revealed plans for 2,500 new general passenger coaches and 10,000 additional coaches. This announcement, coupled with the production of 50 new Amrit Bharat Trains, a high-speed luxury train service, has spurred investor interest in railway stocks. Additionally, expectations of a Union Budget that will prioritize railway infrastructure have further fueled this bullish trend.

Key Drivers Behind the Surge

Sandeep Pandey, Founder of Basav Capital, highlighted that the Railway Minister’s announcement of new coaches and trains is a direct catalyst for the surge. The promise of 2,500 new general passenger coaches and 1,000 additional coaches has driven strong buying activity, leading to a significant upward movement in railway stocks.

Former Deputy Vice President of HDFC Bank mentioned that Indian railway companies are expanding their capital expenditures (Capex), which is expected to sustain business volume growth. This expansion has prompted bullish sentiments among investors, even in the face of high market valuations.

Avinash Gorakshkar, Head of Research at Profitmart Securities, pointed out that the announcement of 3,000 new trains over the next five years, made in November 2023, has laid the groundwork for major railway infrastructure developments anticipated in the upcoming Union Budget on July 23, 2024. Since the Indian government has been focusing on infrastructure development since 2014, the market is looking forward to a growth-oriented budget with significant investments in energy, power, railways, and other infrastructure sectors.

In Conclusion, The current rise in railway stocks is a result of strategic announcements and plans by the Railway Ministry, combined with positive investor sentiment towards the upcoming Union Budget. These factors have created a favorable environment for railway stocks, making them a hot pick among investors despite the broader market’s weakness.

Disclaimer: The opinions and recommendations presented are those of individual analysts or brokerage firms. Investors are advised to consult certified experts before making any investment decisions.