In a remarkable turn of events, railway stocks experienced a surge of up to 15% in response to the G20 summit, with significant gains noted in PSU rail stocks. Notably, IRCON International, which had already doubled investors’ wealth in the past 6 months, catapulted by 15% on Monday, reaching a fresh 52-week high at Rs 154.65.
IRFC shares surged by 10%, hitting the upper circuit limit at a new high of Rs 84.76. Meanwhile, RVNL witnessed a 9.4% increase in its shares, with Titagarh Wagons trading 5% higher. Railtel, RITES, and Texmaco Rail also experienced a 2-3% uptick in their stock prices.
The impetus behind this remarkable rally can be attributed to Saturday’s announcement during the G20 Summit in New Delhi. The announcement pertained to a groundbreaking shipping and rail transportation corridor that would connect countries spanning the Middle East, South Asia, and Europe.
This ambitious plan envisions a comprehensive rail and shipping network that links nations including the United States, India, Saudi Arabia, Gulf and Arab states, and the European Union. The proposed route would integrate railway routes and port linkages, stretching from India to Europe, traversing countries such as the United Arab Emirates, Saudi Arabia, Jordan, and Israel.
While rail stocks have been on the rise due to a robust government order book and a modernization drive in the railways, this recent surge was catalyzed by the G20 announcement.
Investment advisor Sandip Sabharwal, however, cautioned that such projects typically have lengthy gestation periods and require extensive agreements between countries. He suggested that investing in these stocks with the expectation of rapid developments might not be the wisest approach, particularly given the recent rapid price surges.
Technical analysts also pointed out that most PSU rail stocks are currently in an overbought state. “Four out of five major railway stocks, including RVNL, IRFC, IRCTC, and Railtel, are overbought, with RSI levels exceeding 75,” noted Anand James of Geojit Financial Services. While the outlook for these stocks remains optimistic, profit booking in the near term could be expected before bullish trends resume. Furthermore, railway-related stocks like BEML and Concor still appear to have untapped potential, making them attractive prospects for near-term investment.
