Railway stocks: Railway stocks are witnessing tremendous growth during the last five trading sessions. These included RVNL, IRFC, IRCON, Texmaco Rail to RailTel. In these five days, the share of Rail Vikas Nigam Limited (RVNL) has increased from around Rs 306 to Rs 387.25, i.e. a rise of more than 26.50 percent.
Similarly, IRFC shares have increased from Rs 110.81 to Rs 133.60, giving investors a return of about 20 percent. Shares of IRCON International also increased from Rs 150 to Rs 178.25, i.e. an increase of about 19 percent.
Good buying was also seen in shares of RailTel Corporation of India, Texmaco Rail and IRCTC during this period.
Why did railway stocks rise without any fundamental change?
Now the question is that when there was no major change in the fundamentals of the companies, then why did the railway stocks rise so much? Market experts say that the recent rise in railway stocks like RVNL, IRFC and IRCON is entirely the result of change in market sentiment.
In the last one year, there was a sharp decline in railway sector shares due to concerns over high valuations, FII selling and pressure on margins. Now after the same correction, investors feel that the story is being made again in the sector.
Expectations boosted confidence before the budget
The excitement before the Union Budget to be presented in February 2026 has also increased investor confidence. Gross budgetary support, expectation of increase in capex through market borrowing and possibilities of increase in new orders are creating a positive environment for the railway sector.
Passenger fare increase becomes immediate trigger
A major immediate reason for the rise in railway stocks is the increase in passenger fares for the second time in FY26. This increase has come into effect from 26 December 2025. However, this increase is not very much. Only 1 to 2 paise per kilometer depending on the travel class. But it is expected to generate additional revenue of about Rs 600 crore in the current financial year.
This makes the picture of Railways’ earnings clearer. This indicates that the railway sector is gradually moving towards a better financial position. The market has considered this as a positive sign for the PSU companies related to railways.
Expectations related to Budget 2026 increased
Apart from fare hike, pre-budget positioning is also pushing railway stocks higher. Investors are assuming that the government’s emphasis on railway based infrastructure will continue in the upcoming Budget 2026.
Railway PSU stocks are witnessing renewed interest on expectations of increased capex for network expansion, new coaches, signaling systems, safety upgrades and modernisation. History also shows that railway stocks often perform well due to policy expectations ahead of the Budget.
Despite the boom, investors should remain cautious
However, market experts say that investors should be cautious about railway stocks. The current rally is mostly based on expectations and sentiment, and not on any major improvement in earnings in the short term.
Long-term returns will depend on how much support is actually provided in the budget, whether projects are completed on time, how strong cash flows remain and how far the rent reform process progresses. Therefore, investors should focus on the fundamentals and execution capabilities of companies instead of taking decisions based only on short-term growth.
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