BEML, RVNL, IRCTC, IRFC and other railway PSU stocks jump up to 8%; what's driving the rally?

Railway stocks are in prime focus in Wednesday’s trading session as they emerge among the top gainers. The railway PSU index surged nearly 4% on Wednesday amid sharp rallies in its key index constituents like BEML, RVNL, IRFC and more. The rally comes amid broad-based optimism around the Indian equities market despite a gloomy global market scenario.

The broader market indices of NIFTY Midcap 100 surged over 1% and the Smallcap 100 soared nearly 2% on Wednesday as Indian markets stage a smart recovery in November.

Top gainers from PSU railway stocks

All the major stocks from the railway PSU index were trading in the green. However, BEML (+7%), Rail Vikas Nigam Ltd (+6%), IRFC (+5.2%), Railtel (+4.7%), IRCTC (+4.2%) and RITES (+4%) were among the top five gainers on Wednesday. While Shares of ONGC, Container Corporation, ITI, BHEL, which are also contributing to India’s railway sector, also surged up to 3.5% on Wednesday.

Why are railway stocks rising on Wednesday?

The railways stocks have largely remained major underperformers in this year, by delivering negative double-digit returns. At the index level, the NIFTY Railways PSU index has fallen over 22% in 2026 on a YTD basis, and over 20% on trailing twelve month basis.

The high underperofmance has also brought back the valuations to comfortable zone for the entire railways sector. The index which tracks the PSU stocks associated with the railways sector traded at 20x price-to-earnings ratio, near to its median of 20.2x.

Why did railway stocks underperform in 2026?

Railway stocks which were among the investor’s favorite in 2024, suddenly turned the tide in late 2024, 2025 and 2026 after shares witnessed massive profit booking at higher levels. Shares of RVNL, IRCTC, Railtel, IRFC, Ircon International and RITES have fallen up to 70% from the record high levels touched in 2024. Large part of underperformance was driven by subdued earnings growth in the past few quarters.

For instance, RVNL delivered two consecutive years of decline in the net profit. Ircon International three-year profit CAGR is now in the negative at -12%. IRCTC’s net profit growth fell from high double-digits to single digits.

What lies ahead?

Railway stocks have now shown a resurgence after a long-time, has attracted investor attention. The benchmark NIFTY Indian railway PSU index has surged 13% in November amid bargain hunting opportunity grabbed by value investors, after a steep fall from record high levels. However, investors continue to remain cautious as earnings momentum is yet to pick up in the key railway sector PSUs.