Railway Stocks: With a 7.7% decline, RITES is currently seeing the largest decline among its peers, while RVNL and IRFC are both down 5%. On Monday, RailTel’s shares are down 3% while IRCON Internationals are down 4%. Let’s learn more about these railway stocks and their big slump in this article.
Reason Behind the Railway Stocks Sudden Crash
Following the Union Budget presentation on Saturday, selling pressure in state-run railway companies, including RVNL (Rail Vikas Nigam Ltd.), IRFC (Indian Railway Finance Corporation Ltd.), IRCON International Ltd., and RailTel Corporation Ltd., has caused their shares to drop as much as 5% today, on February 3.
Given below are a few reasons behind the sudden fall in railway stocks:
Reason 1: Stock Market Gloom
The general gloom in the world’s stock markets following US President Donald Trump’s announcement of tariffs on Canada, Mexico, and China on Saturday night, which raised worries of a trade war, is one major factor contributing to the decline in these companies today.
Reason 2: The Budget Aftereffects
The railway allocation in the recent budget has not altered, despite a roughly 10% increase in capital expenditures to ₹11.2 lakh crore for the financial year 2025–26 (FY26) from ₹11.11 crore the year before. The budget paper states that the railroads sector will continue to get ₹2.55 lakh cr. for the financial year 2026. In the previous fiscal year, this amount was ₹2.55 lakh crore as well.
Investors were dismayed when the Union Budget unexpectedly made no explicit statements about railway equities. The government was expected by the market to increase capital expenditures for the railway industry, but this did not happen.
Reason 3: Lack of New Investments
The lack of new investments or a drive for reform caused railway stocks to drop widely. As a result, IRCTC (Indian Railway Catering and Tourism Corporation) shares fell 3.95 percent to Rs 763.3 on the NSE, the company’s intraday low. During the previous two sessions, the stock has gone down 6.12%.
Reason 4: Experts Opinions on Allocation of Budget
Although the railways insisted that operational safety is given top priority in the budget, analysts feel that the funding is insufficient. For FY26, the total budget expenditure for telecom and signaling projects is Rs 6,800 crore. The money doesn’t seem to be enough to reach this goal, given Indian Railways’ intention to implement “Kavach” safety technology on 44,000 route kilometers over the course of the next five years,” as per Shailendra Kumar Goel, former DG (Director General) of the Indian Railways Institute of Signal Engineering and Telecommunications.
Final Verdict
After the budget announcement, the railway industry, which was once a market favorite for the previous year, is seeing increased volatility as investors reevaluate the segment’s development potential. Thus, any investment in the railway stocks should be made in consideration of your personal risk tolerance.
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