'Railways Running Like A Jet', But Analysts Still Cautious

Railway stocks have been seeing an upward tick in the last few months and on Monday they went on to touch a one-year high. However, analysts are cautious about entering the sector due to the massive move in the last two days.

"Railway is running like a jet, so what I mean to say is there is hardly anything left, at least from my point of view, technically to warrant a fresh move or take a stand," Hemen Kapadia, senior vice president-institutional equity at KR Choksey Stocks and Securities, told NDTV Profit.

In the last two days, there has been a massive move in the railway sector and this makes him cautious about making new purchases, he said.

Vijay Chopra, managing director and chief executive officer of Enoch Ventures, concurred and said that he is wary of buying stocks in the railway pack. One needs to wait for some pause in the cycle, but investors can book some profit while the stocks are trading higher, he said.

India's benchmark stock indices closed little changed on the first day of the week due to a lack of any major triggers, even as market participants await first-quarter earnings to give direction to the market. Gains in the shares of ITC Ltd. and Reliance Industries Ltd. offset the fall in HDFC Bank Ltd. and Titan Co., keeping the indices subdued.

Both the Nifty and Sensex ended little changed at 24,320.55 and 79,960.38, respectively. Intraday, both fell around 0.3%.

While railway stocks are running high, the Nifty and Nifty Bank indexes have been flat. Kapadia said that he would prefer to stay away from the indices for the time being, as Nifty is in the overbought category and "looks a bit tired." Sectors will be playing musical chairs, according to him.

"Bank Nifty is distorted because of HDFC Bank Ltd.," said Kapadia. The bank has single-handedly wrecked the technical picture for Bank Nifty, he said. If the index breaks the 52,000 mark, then the index could fall further, according to him.

FMCG was also on an up-move, with the Nifty FMCG index closing 1.63% higher on Monday. According to Chopra, a good monsoon, in addition to expected relief for the middle class in the upcoming budget, will help boost the sector. Chopra also expects rural sales to pick up in the coming quarters.

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