Shares of railway companies fell by up to 7 percent in morning trade on June 4, the counting day, as investors rushed to book profits. This reaction followed initial election results that painted a different picture from exit polls, which had suggested a landslide victory for the BJP.
At about 9:30 am, shares of Ircon International have plummeted 9 percent, the worst affecting out of all the railway stocks. IRFC also nosedived over 7 percent, while Titagarh, RVNL, IRCTC also slipped over 6 percent in trade. Texmaco Rail and Engineering shares also fell over 5 percent.
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Railway stocks have been on a rally over the last year, but not all investors have been onboard. In a recent conversation with Moneycontrol, veteran investor Madhusudhan Kela said that while he found value in some PSU stocks, he was not so bullish on railway stocks. The upbeat sentiment in railway stocks was buoyed by a sustained focus on infrastructure-led growth along with a focus on 'Make in India'.
Railway stocks are among the Modi stocks, those companies that will get the benefits of policy and governance continuity after the return of Modi. A new push in the railway sector will likely boost companies related to the railway sector.
During the interim budget, Finance Minister Nirmala Sitharaman announced a capex allocation of Rs 2.55 lakh crore for the Indian Railways in the new financial year, surpassing the previous all-time high of Rs 2.4 lakh crore allocated in the last budget. This railway capex was just 5 percent higher than the year-ago budget and lower than the analysts' estimates of 10 percent higher allocations from the last budget.
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