India Advocacy

Multibagger railway stocks in India experienced a significant rally, surging by up to 15% following an announcement made during the G20 Summit in New Delhi. Prime Minister Narendra Modi’s announcement regarding a shipping and rail transportation corridor linking countries across the Middle East, South Asia, and Europe had a positive impact on rail stocks.

Rally in Rail Stocks

• IRCON International, a PSU rail stock, surged up to 15% on Monday, hitting a fresh 52-week high at Rs 154.65.
• IRFC shares also saw a substantial increase, zooming 10% to reach the upper circuit limit at a fresh high of Rs 84.76.
• Other rail-related companies such as RVNL and Titagarh Wagons witnessed gains of 9.4% and 5%, respectively.
• Railtel, RITES, and Texmaco Rail also saw their shares rise by 2-3% each.

Reason Behind the Rally

While rail stocks have been performing well due to a strong government order book and railway modernization programs, the recent buying spree was primarily attributed to the announcement made during the G20 Summit. The proposed shipping and rail transportation corridor aims to connect countries across regions, including the Middle East, South Asia, and Europe.

Corridor Details

• The corridor envisions a comprehensive rail and shipping connectivity network linking the US, India, Saudi Arabia, Gulf Arab states, and the European Union.
• It plans to integrate railway routes and port linkages, spanning from India to Europe, passing through the United Arab Emirates, Saudi Arabia, Jordan, and Israel.

Cautionary Note

Investment advisor Sandip Sabharwal cautioned that such large-scale projects often take 8-10 years to materialize due to the need for extensive agreements between different countries and their long gestation periods. Therefore, investors should exercise caution and consider the extended timeline when investing in these stocks, especially given their recent rapid price increases.