10 stocks surge ahead of Rly Budget

The share price of 10 companies, whose business is related with the Indian Railways, is swiftly rising ahead of the Budget to be presented by Mamta Banerjee on July 3.

The share price of Kalindee Rail Nirman Engineers, Container Corporation, BEML, Simplex Casting, Kernex Microsystems, Titagarh Wagons, Texmaco, Stone India, Hind Rectifiers and Bharat Heavy Electricals have witnessed a sharp run-up ranging between 2 and 28 per cent in just three trading sessions.

According to market players, these stocks generally witness a sharp run-up ahead of the Budget and fall significantly after the announcements.

For instance, Kalindee Rail, involved in installation, commissioning of signaling and telecommunication projects and execution of gauge conversion projects, gained nearly 30 nearly per cent in 10 trading sessions and was trading over Rs 500 a share, before the then Railway Minister Lalu Prasad Yadav was to present the Budget in 2008. The stock, however, slipped to around Rs 350 within the next few days, post-Budget.

In 2008, Kernex Micro, involved in monopoly business of train anti-collusion dividers, gained around 45 per cent in 10 trading sessions from a level of Rs 160 to Rs 230. In the 10 trading sessions, post-budget, the stock slipped back to around Rs 155.

Prior to the 2007 Railway Budget, Kernex Micro had gained 17 per cent in the five trading sessions from Rs 145, and post-Budget, the stock was back to the same level. In 2007, Kalindee Rail had gained 23 per cent in 10 trading sessions from Rs 160 prior to the Budget announcements. The stock was again traded at around Rs 160 in the next three trading sessions. A similar pattern was witnessed in 2006 as well and stocks which had gained significantly prior to the Budget fell sharply too.

“Over the past few years, there have been no negative surprises in the Railway Budget and expectations are high. Prior to the Budget, these stocks are safe bets as only these companies get all the railway-related orders, for whatever initiatives are announced in the Budget,” said independent equity advisor S P Tulsian.

For instance, said Tulsian, the government had announced to spend Rs 3,500 crore on anti-train collusion devices. But the money still lies unused and Kernex Microsystems is the only listed company in the country that is involved in this business. The cost rises over three-fold if these devices are imported.