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Published: June 12, 2024
Updated: June 12, 2024

Railway Stocks Surge Amid Optimism for Policy Continuity and Modernisation

Strong Performance in Railway PSU Stocks

Railway Public Sector Undertaking (PSU) stocks have shown significant gains, with increases of up to 8.5%. This rally reflects investor optimism surrounding policy continuity and ongoing railway modernisation efforts under the BJP’s third consecutive term.

Robust Gains in Key Stocks

RailTel Corp led the pack with an impressive 8.5% surge in today’s trading session, closely followed by Ircon International with the same intraday gain. IRFC and Rail Vikas Nigam also experienced solid increases of 4.2% and 4.3% respectively, while IRCTC recorded a gain of 4.2%. These stocks, known for their high-wealth creation potential, have rebounded strongly after a sharp correction on June 4.

Investor Optimism on Policy Continuity

Investors are buoyed by the BJP's continued leadership, anticipating stability and further economic reforms. The government’s extensive modernisation efforts within the Indian railway system over the past decade have significantly boosted investor confidence.

Major Modernisation Initiatives

The government has prioritised railway rejuvenation, which includes the expansion of metro train networks across various cities and the introduction of 'Vande Bharat' trains in 2019. The Indian Railways 2023 report outlines plans to market semi-high-speed ‘Vande Bharat’ trains internationally by 2025-26, targeting European, South American, and East Asian markets.

Technological Advancements

Indian Railways is also focusing on technological advancements in signalling and telecommunication. Plans include converting 15,000 km to automatic signalling and fitting 37,000 km with 'KAVACH,' a domestically developed Train Collision Avoidance System. For 2024-25, the capital expenditure for railways is targeted at $30.33 billion (Rs. 2.52 lakh crore).

Leadership Continuity

Ashwini Vaishnaw's reappointment as Minister of Railways has further fuelled investor optimism. Under his leadership, the railways have seen significant modernisation and expansion. Vaishnaw also holds portfolios as Minister of Information and Broadcasting, and Minister of Electronics and Information Technology.

Significant Orders and Contracts

The Siemens-RVNL Consortium recently received a Letter of Acceptance from Bangalore Metro Rail Corporation Ltd. for a project worth ₹394 crore. This contract involves the engineering, supply, erection, testing, and commissioning of various electrical systems for Phases 2A and 2B of the metro rail project.

The recent gains in railway PSU stocks reflect strong investor confidence driven by policy continuity, modernisation efforts, and substantial capital expenditure plans. As the government continues to enhance the country's transportation infrastructure, the railway sector is poised for further growth and development.