Railway stocks faced a significant downturn for the second consecutive trading session on Wednesday as profit-booking took center stage. Public sector railway companies like Rail Vikas Nigam (RVNL), Indian Railway Finance Corporation (IRFC), RailTel Corporation of India, RITES, and Ircon International saw declines ranging from 11% to 17% over the two sessions. Meanwhile, shares of private companies Texmaco Rail & Engineering and Titagarh Rail Systems plunged by as much as 20%.
Continuing their losses from Tuesday, railway stocks saw substantial declines today, with Titagarh being the top loser in this period, experiencing a 10% drop. Additionally, RVNL (5%), IRFC (8%), RailTel (7%), Ircon (6%), RITES (1.4%), and Texmaco (6%) also faced notable losses.
This correction comes after a robust rally in these stocks, which had reached their 52-week highs over the past month.
The profit-booking activity in these stocks was accompanied by significant trading volumes, with over 13.80 crore shares being traded for IRFC and more than 6.56 crore shares for RVNL. Similar trends were observed for other stocks in the sector.
On Monday, railway stocks witnessed a substantial uptick following the G20 announcement, where India, the US, and Saudi Arabia revealed plans to create an economic corridor linking the Middle East with South Asia and eventually Europe. These stocks surged after the announcement, with many of them reaching new 52-week highs on Monday.
Last week, Anand James, Chief Market Strategist at Geojit Financial Services, had alerted investors about the possibility of profit booking in railway stocks. “After registering an average gain of 14% this week and more than 30% in the last month, railway stocks might experience profit booking pressure. Four out of the five major railway stocks, including RVNL, IRFC, IRCTC, and Railtel, are in overbought territory, with the RSI (Relative Strength Index) above 75. While the outlook for these stocks remains positive, some profit booking is expected in the short term before a potential rebound,” James had noted.
