Railway Stocks In Melancholy As Interim Budget Disappoints Expectations

Railway stocks rolled over in the Thursday trading session post interim budget as the presentation did not appease the expectations related to the allocation for railway expenditure.

Rail Vikas Nigam or RVNL, Railtel, IRFC, Jupiter Wagon, Titagarh Railways and IRCTC were among the stocks which plunged between 4 per cent to 1 per cent on the National Stock Exchange (NSE). Notably, RVNL traded as the biggest laggard with 3 per cent loss.

Three major economic railway corridor programmes will be implemented, including energy, mineral and cement corridors, port connectivity corridors, and high traffic density corridors. The projects have been identified under the PM Gati Shakti for enabling multi-modal connectivity. They will improve logistics efficiency and reduce cost.  

“The resultant decongestion of the high-traffic corridors will also help in improving the operations of passenger trains, resulting in safety and higher travel speed for passengers. Together with dedicated freight corridors, these three economic corridor programmes will accelerate our GDP growth and reduce logistic costs. Forty thousand normal rail bogies will be converted to the Vande Bharat standards to enhance the safety, convenience and comfort of passengers,” said Finance Minister Nirmala Sitharaman.

In the last budget (FY24), the minister allocated Rs 2.4 lakh crore for railways, which was notably the highest-ever allocation. Huge capex expenditure by the government and the ‘Make in India’ campaign resulted in positive cues for the railway rally.

“The stock market's reaction to the budget announcements has been mixed, with positive momentum observed in the FMCG sector due to initiatives aimed at increasing disposable income among the middle class. However, railway stocks experienced a decline, possibly due to concerns over the implementation and impact of announced projects. Overall, the market's muted reaction suggests cautious optimism, with investors closely monitoring the implementation of budget measures and their tangible impacts on various sectors,” said Sonam Srivastava, Founder and Fund Manager at Wright Research.

The overall market sentiments remained unaffected due to the interim budget 2024 as the declarations were not substantial enough to shake the market. The benchmark indices, Nifty and Sensex traded range bounded during the budget presentation.