Railway Stocks Gain Momentum Ahead of Interim Budget: A Closer Look at the Surge

In anticipation of Finance Minister Nirmala Sitharaman’s upcoming interim budget on February 1, a notable surge has been observed in the shares of railway-related companies.

Indian Railway Catering and Tourism Corporation (IRCTC), Jupiter Wagons, Rail Vikas Nigam Limited (RVNL), Indian Railway Finance Corporation (IRFC), and IRCON International have all recently hit their new 52-week highs.

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Market Performance Snapshot: IRCTC, Jupiter Wagons, RVNL, IRFC, and IRCON International

IRCTC shares have witnessed a 13% increase in the last month, with Jupiter Wagons and RVNL shares rising by 13% and 15%, respectively. IRFC shares have shown an impressive gain of 36%, while IRCON International shares have seen a rise of 21%. But what factors are fueling this upward momentum in railway-related stocks?

Budget 2024-25 Outlook: High Expectations for Railway Allocations

Analysts attribute the surge in railway stocks to the anticipation that the Modi government might allocate substantial funds to the Railways in the upcoming budget. In the previous fiscal year, Finance Minister Nirmala Sitharaman allocated a record Rs 2.40 lakh crore to the Railways, marking a significant increase from previous years.

The positive momentum in railway stocks is expected to continue into 2024, fueled by the prospect of a higher budgetary allocation for the Railways in the upcoming fiscal year.

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Boost from Infrastructure Projects: India-Middle East-Europe Economic Corridor

Additionally, the proposed ‘India-Middle East-Europe Economic Corridor’ is poised to provide a substantial boost to the Railways. This ambitious project, connecting India, Saudi Arabia, UAE, and Europe, holds the potential to be a game-changer for the region, acting as a long-term growth booster.

Government Initiatives Driving Growth: Vande Bharat Trains and Station Modernization

Government initiatives such as the launch of 68 new Vande Bharat trains by December 7, 2023, and plans to operate a total of 400 such trains, are contributing to the positive sentiment. The ‘Amrit Bharat Station Scheme’ for the refurbishment of railway stations and the identification of 1,309 stations for modernization further signal a commitment to enhancing passenger facilities, with a budget of Rs 13,355 crore allocated for the current year.

In conclusion, the confluence of budgetary expectations, infrastructure projects, and government initiatives positions railway stocks for continued growth in the foreseeable future.