Market storm increased speed of canceled 'train', Railway Stocks on market track gave excellent returns to investors

Amidst the ongoing storm in the stock market, railway stock has made its investors rich. A huge rise is being seen in almost all railway stocks. Some shares have registered a rise of 5% and some 15% in a single day. Let us understand the reason behind this rise in the stock.

Even though trains are running late or being canceled amidst dense fog in North India, there is no hindrance in the rally of Railway Stocks. Today, when the market was opened on Saturday, like the previous trading session, even today railway stocks were seen showing great growth in the market. The rise seen in railway stocks before the budget has happened very rarely in history. Shares of IRCON International and IRFC are trading at their 52 week high. These stocks have provided double returns to investors in a short time. Now a question coming in the mind of the common trader is that what is the real reason behind the pre-budget rally? Similarly, while the market is trading flat today, bullishness is being seen in railway stocks. Let's try to solve this first.

Multibagger returns in one year

Almost all railway stocks have given multibagger returns in the last one year, with IRFC giving a massive gain of 422% in the last 12 months. RITES has returned 70%, which is still a better performance than Nifty, which has given around 20% returns during this period. IRFC has managed to break its record seven times in the last eight trading sessions and has gained 46% in the rally. The company's market cap touched Rs 2.30 lakh crore on Saturday as the stock jumped 10% to hit a 52-week high of Rs 176.25 on the NSE. The stock has seen a rapid rise in its price from its 52-week low of Rs 25.40 on March 28, 2023. If we look at today's latest level, the increase in less than a year is a staggering 593%. Some experts say that this stock is currently trading in the overvalue zone. That means there are some chances of loss in this stock.

Trigger point for railway stocks?

According to stock market experts, investors are hopeful that the government may announce investment for the development of railway infrastructure in the interim budget to be presented on February 1. Also, the profits of almost all railway companies have been excellent in the third quarter. According to Live Mint, the reason behind the ongoing rise in railway stocks is the announcement of new investment of about Rs 7 lakh crore by the Government of India for the development of rail infra. In the upcoming budget, the market is expecting that the Indian government may continue to focus on the infrastructure sector, which is expected to benefit these railway PSU companies. Apart from this, railway PSUs like IRCTC have worked to diversify their business in recent years.

Advising these railway stockholders to be cautious about the next one to two quarters, Saurabh Jain, Vice President, SMC Global Securities, says that with the Lok Sabha elections 2024 fast approaching, PSU companies will remain on the sidelines after the Union Budget 2024. are supposed to. The model code of conduct may come into effect after the announcement of the date of Lok Sabha elections. In such a situation, PSU companies will not be able to maintain the brisk business that they are getting these days. Therefore, shareholders of these companies need to be updated about the new developments regarding the Lok Sabha elections and the upcoming Budget 2024.