Why are Railway Stocks Rising?

Shares of railway companies surged over 15% in a week on the BSE amid heavy trading volumes, outperforming a sluggish market. Over the last 5 days, these stocks have seen gains of up to 20%, driven by a positive business outlook. Companies like Rail Vikas Nigam (RVNL), Indian Railway Finance Corporation (IRFC), IRCON International, and RailTel Corporation of India recorded intra-day gains ranging from 4% to 15% today.

While looking at the recent performance of these stocks, RVNL stands out with a remarkable 1-week return of 47.25% and a 1-month return of 61.92%. IRFC Ltd also delivered robust results, showing a strong 1-week return of 21.19% and a 1-month return of 22.29%. IRCON International achieved notable gains with a 1-week return of 16.93% and a 1-month return of 23.81%.

RailTel Corporation of India joined the surge, providing investors with a notable 1-week return of 21.57% and an impressive 1-month return of 41%. These substantial returns underscore the investor enthusiasm and confidence in railway stocks. Let’s look at the factors driving railway stocks.

Driving Forces Behind the Surge in Railway Stocks

Strong Buying Interest Driven by Government Announcements

Railway stocks like RVNL, Ircon International, and IRFC increased due to strong buying interest. This came after Railway Minister Ashwini Vaishnav announced plans for 2,500 new general passenger coaches and 10,000 more coaches last week. Vaishnav announced 50 new high-speed and luxurious Amrit Bharat trains, further boosting railway stocks.

Government’s Focus on Infrastructure

The government’s push on infrastructure, especially through domestic railways, defence, and power manufacturing, has boosted stocks in these sectors over the past few years.

In addition to this, government support is adding fuel. The budget for railway projects in the Inter was increased to ₹2.55 lakh crore for 2024-25, up from ₹2.40 lakh crore in 2023-24.

Hopes for Union Budget 2024 Focus on Railway Infrastructure

The hope of a special focus on railway infrastructure in the Union Budget has also increased these stocks’ share prices. The government prioritises improving railway infrastructure, speeding up the development and completion of tracks, rail electrification, rolling stock manufacturing, and passenger freight services.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.