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As soon as the changed fares of passenger trains were implemented in Indian Railways, its effect became clearly visible in the stock market. On Friday, tremendous rise was seen in many railway related stocks and some stocks jumped by 10 to 12 percent. Investors considered this as a sign of strengthening the financial position of the Railways, which can benefit the companies related to the Railways.
RVNL and IRFC showed the most momentum
Rail Vikas Nigam Limited (RVNL) emerged as the star of railway shares on Friday. Its shares rose sharply in afternoon trading. Apart from this, strong buying was also seen in Indian Railway Finance Corporation (IRFC). Shares like Indian Railway Catering and Tourism Corporation (IRCTC) and Jupiter Wagons also registered gains. Overall, the railway sector was seen returning to its glory after a long time.
Why did railway shares increase?
The real reason is the increase in passenger train fares. The government has implemented a new fare structure, which has been increased for the second time this year. Railways is expected to get additional revenue of hundreds of crores of rupees from this in the next financial year. The market believes that this will improve the income of Railways and increase its spending capacity.
Health of railways will improve, companies will get work
Market experts say that even if the increase in fares does not have a direct impact on the earnings of railway companies, the strong financial position of the Railways may increase the expenditure on infrastructure, wagons and new projects. Due to this, EPC companies, wagon manufacturers and service companies related to railways are likely to get more orders.
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Investors’ preparation before the budget
According to experts, expectations have also increased in the railway sector regarding the upcoming Union Budget. Investors are already making positions so that if Railways gets a bigger allocation in the budget, they can take advantage of it. This is the reason why the recent rise is not being limited to rents alone.
Shares had fallen earlier, now there is a chance for recovery
In the last few months, there was a decline in many railway shares. Now the fare increase and budget expectations have rekindled the confidence of investors. However, some analysts believe that after the sharp rise, profit booking may also be seen, hence investors should be cautious.