Ircon, IRFC, Titagarh Lead Railway Rally As Markets Bet On Big Modi Win
Ircon International Ltd. and Indian Railway Finance Corp. stocks led the rally as they rose over 6% in early trade.
Railway stocks rallied on Monday on the back of a roaring stock market, as investors anticipate a bigger majority for the Bharatiya Janata Party-led NDA government, which is expected to maintain its focus on infrastructure building, particularly on expanding the scale and services of the world's fourth-largest rail network.
During early trade, Ircon International Ltd. and Indian Railway Finance Corp. stocks surged by over 6%. Shares of Rail Vikas Nigam Ltd. and wagon-maker Titagarh Rail Systems Ltd. were up over 5%.
The equity markets and rupee saw a stellar opening after exit polls, which showed policy continuity by the incumbent government and strong macroeconomic data.
An analysis of all 12 exit polls indicates a clean win for the incumbent Prime Minister Narendra Modi-led Bhartiya Janata Party for the third time in the 2024 Lok Sabha election, as results will be announced on June 4.
The consensus among brokerages is that an expected victory of the BJP augurs well for the economy and capital markets, as it provides stability and continuity in policymaking with a single-party majority government, which will be expected to continue pushing its economic agenda.
Bernstein anticipates ongoing infrastructure and capex projects, with the government likely initiating ambitious new initiatives. They also predict that incentives and foreign direct investment will continue to support manufacturing.
With a BJP win, Nomura expects a boost in infrastructure build-out and manufacturing-led growth, as well as a short-term rally and continued PSU stock performance due to potential reforms.
Citi expects stocks tied to infrastructure, logistics, industrial, and manufacturing sectors to perform well.
The two terms of the Modi government saw a big increase in spending on the railways—with the introduction of faster trains like Vande Bharat and Tejas Express, technological upgrades, the expansion of urban metro networks, and the redevelopment of major stations.
