Shares of popular railway stocks such as RVNL, IRCON, IRFC and Titagarh were all deep in the red after the budget failed to live up to the expectations of the markets.
What Happened: The slump comes as the Union Budget kept capital expenditure unchanged at ₹11.11 lakh crore. Railway stocks such as RVNL, IRFC, Titagarh and IRCON have been upbeat in the run-up to the budget presentation in hopes of increases in capital expenditure for railway infrastructure.
See Also: NTPC, BHEL Shares In Green On JV Announcement By FM In Budget
Nuvama Institutional Equities had forecasted a 15%-20% increase in capital expenditure for the railway sector. Railway stocks have already seen substantial gains due to the government’s focus on infrastructure development.
The broader markets experienced a significant downturn following a series of hikes in capital gains taxes. The tax on short-term capital gains was increased to 20% from the previous 15%, while the tax on long-term gains was raised to 12.5% from 10%. These changes have caused considerable concern among investors, leading to a notable impact on market sentiment and resulting in a broad sell-off across various sectors.
Over the past year, these stocks have surged to the moon: IRFC has risen more than 530%, RVNL has soared 390%, Railtel has surged 270%, and both IRCON and Jupiter Wagons have increased by over 260%.
This impressive performance highlights the sector's growing attractiveness to investors. The rally has also pushed the valuations of these stocks to the sky with some major companies trading at more than 80 times the price-to-earnings ratio.
Price Action: Here's a breakdown of stock reactions following the speech.
Shares of IRCON were down 6.82% at ₹297.20.
Shares of IRFC were down 5.99% at ₹192.33.
Shares of Jupiter Wagons were down 5.35% at ₹607.60.
Shares of RVNL were down 5.01% at ₹592.85.
Shares of Oriental Rail Infrastructure were down 5.00% at ₹401.15.
Shares of Railtel were down 4.96% at ₹497.75.
Shares of Rites were down 3.86% at ₹702.00.
Shares of IRCTC were down 3.10% at ₹975.10.
Shares of Titagarh Rail Systems were down 2.15% at ₹1,588.00.
Shares of Container Corp were down 1.72% at ₹1,021.15.
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