RVNL, IRFC, Railtel and IRCON international fall over 5% as Budget fails to provide more steam to the sector

Railway stocks have seen an impressive run in the past few months. The railways are undergoing a significant transformation, and with continued support from the government, railway companies have plenty of room for growth. However, most railway stocks traded in the red following a lacklustre Budget.

The Union Budget for 2024 saw the allocation of ₹11.1 lakh crore for capital expenditure. The capital expenditure figure aligned with the government's set aside in the interim Budget. Investors were expecting more government support for the railway sector's development. However, Finance Minister Nirmala Sitharaman did not mention the railway sector and the government’s plans to further develop it.

As a result, several railway stocks were trading deep in the red. Rail Vikas Nigam (RVNL) closed Tuesday’s session lower by 5.14% at ₹592. The stock has seen a substantial increase in its price, rising 225% since the beginning of the year and over 336% in the past year.

Shares of IRCON closed deep in the red and were down by 7.46% to ₹295.15. The shares of the company have gone up by 218% in the past year.

Meanwhile, Indian Railway Finance Corp. (IRFC) closed down 4.83% at ₹194.70. In the run-up to the budget, the shares of the company have rallied by over 10% in the past month and 454% in the past year.

RITES faced considerable selling pressure and ended the session with losses of over 4.82% to ₹695 while RailTel ended the day at ₹497, lower by 5.10%.

Although the railway sector has seen a steady inflow of government support in the past, the sector’s lack of mention in the Union Budget speech has disappointed investors. Moreover, after a sizeable rally in railway stocks over the past few months, several investors may have decided to take some money off the table.