The railway sector has long been the backbone of the nation, playing an important role in transportation and economic development. With the advent of online trading platforms, investors are increasingly eyeing railway stocks for intraday opportunities. This article examines whether rail stocks can keep pace with the rapid movements of intraday trading.
Recent Intraday Trends of Railway Stocks
In the lead-up to the Union Budget 2025, railway stocks experienced notable volatility. For instance, IRCON International’s share price surged by up to 10% to an intraday high of ₹223 on the BSE, though it remained 37% below its July 2024 peak of ₹351.65.
Similarly, Rail Vikas Nigam Limited (RVNL) saw a 9% increase, while Indian Railway Finance Corporation (IRFC) and Indian Railway Catering and Tourism Corporation (IRCTC) advanced by 1.8% and 5.4%, respectively.
However, post-budget announcements led to a downturn. The government’s decision to keep the railway sector’s capital expenditure unchanged at ₹2.52 lakh crore for FY26, the same as the previous year, disappointed investors. Consequently, stocks like IRCTC, IRFC, and IRCON declined sharply, dropping as much as 8% in intraday trade.
Factors Influencing Intraday Movements of Rail Stocks
Intraday trading involves placing buy and sell orders on intraday stocks within a single trading day. It demands agility, precision, and a deep understanding of market dynamics. It necessitates swift decision-making, quick order execution, and a keen awareness of price fluctuations.
For railway stocks, here are the factors that should be considered for intraday trading.
1. Government Policies and Budget Announcements
Allocations and policy decisions directly impact investor sentiment. The static capital expenditure in the recent budget led to immediate sell-offs.
2. Company-Specific Developments
Financial results and strategic initiatives of railway companies play a crucial role. For example, IRFC share price was impacted after the company reported a 4.41% profit growth for Q2 FY25, with a profit after tax of ₹1,612.65 crore compared to ₹1,544.58 crore in the same quarter the previous year.
3. Liquidity and Trading Volume
High trading volume enhances liquidity, making a stock more favourable for intraday trading. IRCTC, for instance, consistently ranks among the most traded railway stocks, attracting both retail and institutional investors. Increased liquidity helps in executing trades efficiently, reducing slippage and price manipulation risks.
4. Market Sentiment and Economic Indicators
Railway stocks are influenced by macroeconomic trends such as GDP growth, fuel prices, and inflation rates. A strong economic outlook boosts investor confidence while rising fuel costs and inflationary pressures can lead to price corrections.
Suitability for Intraday Trading
Railway stocks exhibit both stability and volatility, making them intriguing for intraday traders. The sector’s strong government backing and essential role in transportation and travel provide a foundation of stability. However, external factors like policy changes, budget allocations, and infrastructure investments can lead to significant short-term price fluctuations.
For intraday traders, these stocks offer opportunities to capitalize on rapid price movements. However, it’s essential to conduct thorough research, stay updated with sector-specific news, and implement robust risk management strategies.
Trading Strategies for Railway Stocks
- Momentum Trading – Capitalising on short-term price movements based on news, earnings reports, or policy changes.
- Support and Resistance Levels – Identifying key price levels where stocks tend to reverse trends, helping traders make informed entry and exit decisions.
- Technical Indicators – Using moving averages, Relative Strength Index (RSI), and Bollinger Bands to track price momentum and volatility.
Conclusion
Railway stocks present a compelling mix of stability and volatility, making them suitable for intraday trading. While the sector benefits from government support and ongoing modernisation efforts, external factors can lead to rapid price changes. Traders should remain vigilant, informed, and prepared to navigate the dynamic landscape of railway stocks in the intraday market.
