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Updated: July 8, 2014 22:48 IST
Railway Budget 2014

Rail stocks crash

Special Correspondent
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While the S&P BSE Sensex plunged 1,97 per cent on profit-booking, the railway stocks crashed in the range of 5-17 per cent, as these stocks had gained substantially over the past weeks in anticipation a favourable budget for them

Stocks of companies dependent on the Indian Railways, called ‘rail stocks’, plunged sharply on Tuesday as the Railway Budget presented by Union Minister Sadananda Gawda could not meet the over-expectation of the market.

While the S&P BSE Sensex plunged 1,97 per cent on profit-booking, the railway stocks crashed in the range of 5-17 per cent, as these stocks had gained substantially over the past weeks in anticipation a favourable budget for them.

For example, in the past three months, Titagarh Wagons had appreciated 172 per cent, Texmaco has surged 82 per cent and Kalindee Rail had gone up 98 per cent on speculative buying.

But on Tuesday as the rail budget was presented, all these stocks pared gains and closed in the red.

Texmaco Rail & Engineering plunged 19.84 per cent to close at Rs. 116.80; Container Corporation closed with loss of 7.12 per cent at Rs.1,252.10; BEML closed with a loss of 5 per cent at Rs.774.75; Kalindee Rail plunged 4.99 per cent to close at Rs.128.60; Titagarh Wagons plunged 4.99 per cent to close at Rs.314.05; Hind Rectifiers closed with a loss of 4.94 per cent at Rs.56.80 while Kernex Micro closed with a loss of 4.94 per cent at Rs.70.25.

Though the budget has been praised by the industry as growth-oriented and a game-changing one, these stocks bore the brunt of over-expectation of investors which could not be met.

“As a run-up to the budget, unrealistic expectations were built in,” said Ambareesh Baliga, independent analyst.

“It (the plunge) is the result of failed expectations. People who had bought these stocks in anticipation of a bonanza for these companies were unhappy. They had thought that lot of orders would flow into these companies and that did not happen,” said Arun Kejriwal, Founder, Kejriwal Research & Investment Services Pvt. Ltd. and Advisory.

Analysts said that these stocks were bound for fall as they had scaled up sharply in the run-up to the Railway Budget.

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Courtesy: LOK SABHA TV