Summary of this article
Nifty India Railways PSU index is down 15 per cent since inception, November 25, 2025
Railway stocks rebounded up to 38 per cent in last four sessions amid sharp volume surge
Experts say rally is driven by January pre-Budget positioning, not fundamental improvement
The calendar year 2025 has been challenging, if not downright brutal, for railway sector investors. The Nifty India Railways PSU index, launched in November last year, has fallen around 15 per cent since inception. After an exceptional run in 2024, when railway stocks ranked among the year’s top performers, the sector’s market darlings have largely remained in a consolidation phase this year.
In 2024, railway stocks surged on the back of the government’s aggressive push on rail infrastructure spending. Investors mainly made bets on expectations of sizeable allocations in the Union Budget for expansion, capacity addition, and modernisation for railway sector companies.
The rally in 2024 was also supported by new order wins across the sector. A healthy order pipeline boosted revenue visibility and earnings confidence, which helped the rally sustain throughout the year.
That optimism, however, has failed to hold on in 2025. Indian Railway Finance Corporation (IRFC), Indian Railway Catering and Tourism Corporation (IRCTC), Rail Vikas Nigam Limited (RVNL), and Container Corporation of India (Concor), the four largest constituents of the Nifty India Railways PSU index, having a cumulative weight of 68.83 per cent, have all fallen significantly from their 2024 highs. IRFC, Concor, and RVNL are down around 46 per cent each, while IRCTC has lost nearly 40 per cent.
Railway Stocks Rally Up To 38% In Four Sessions
Over the past four trading sessions, from December 19 to 24, the sector has seen a sudden rebound, supported by a sudden spike in trading volumes. IRFC has gained over 11 per cent, RVNL has surged more than 14 per cent, Concor has risen about 3.5 per cent, and IRCTC has advanced over 3 per cent.
Gains in IRCTC came after Indian Railways announced a rationalisation of its fare structure, which will come into effect from December 26, 2025.
Other railway stocks, such as Jupiter Wagons, rallied over 38 per cent in the last four sessions, of which much of the rally came after the company disclosed an increase in promoter shareholding. Its promoter, Tatravagonka AS, acquired additional equity shares through the conversion of convertible warrants issued earlier under a preferential allotment approved by the company. RailTel Corporation of India rose over 12 per cent during the same time frame amid reports that the state-owned telecom is in talks with Elon Musk-owned Starlink for a potential partnership in India.
Why Are Railway Stocks Rallying Now
Apart from the stock-specific action, there seems to be a sector-wide renewal in interest, which does not seem just a coincidence. The renewed interest in railway stocks, Ravi Singh, chief research officer from Master Capital Services, says, appears to be led largely by January pre-Budget positioning rather than a decisive improvement in fundamentals. “Markets are factoring in expectations of higher railway capex in the Union Budget 2026-27, especially around execution continuity and funding support through gross budgetary allocations and selective market borrowings.”
That said, Singh further added that with foreign institutional investor (FII) outflows still persisting and margin visibility limited, the rally remains more sentiment-led at this stage.
What Should Investors Do?
For investors looking to ride the railways rally, Singh pointed out that historically, pre-Budget rallies in railway and other capex-heavy stocks tend to be tactical. “A meaningful part of the gains often gets tested or partially unwound post-Budget unless the actual allocations or policy measures exceed expectations,” he explained. In past cycles, only companies with visible order inflows and strong execution have managed to sustain momentum beyond the Budget.
Singh also warns that at current levels, valuations for many railway stocks are running ahead of near-term fundamentals. While the long-term structural story for rail infrastructure remains intact, earnings upgrades and margin expansion have yet to fully catch up with the price action. He said that from a medium-to-long-term perspective, stocks such as RVNL, IRCON, and IRFC remain attractive, but near-term price movements are likely to stay volatile and led by news around Budget outcomes.
