Rail stocks drop on profit booking

Shares of nine companies whose fortunes are linked to orders from Indian railways fell by 0.78% to 16.01% at 10:45 IST on BSE on profit booking ahead of Railway Budget 2015-16 on Thursday, 26 February 2015.

Meanwhile, the S&P BSE Sensex was up 25.34 points or 0.09% at 29,000.45.

Among railway stocks, Hind Rectifiers (down 8.45%), NELCO (down 1.01%), Kalindee Rail Nirman (down 16.01%), Titagarh Wagons (down 9.99%), Stone India (down 9.74%), Texmaco Rail & Engineering (down 15.45%), Kernex Microsystems (down 4.95%), and BEML (down 0.78%) declined. Zicom Electronic Security Systems rose 0.17%.

Container Corporation of India dropped 4.36% as the stock turned ex-dividend today, 24 February 2015, for an interim dividend of Rs 8 per share for the year ending March 2015.

Most of these rail stocks had rallied in past one week. The Railway Budget 2015-16 will be tabled in the parliament by the rail minister Suresh Prabhu on Thursday, 26 February 2015. This will be the first full railway budget of the Narendra Modi government and hopes are already running high that the document will contain innovative and out-of-the-box plans to turnaround railways and modernise the network and its supporting infrastructure.

The Rail Budget will mainly look at issues such as dynamic revenue earning model, freight and fare rationalisation, and capacity augmentation, report said. Although, the Rail Ministry has several plans for the fiscal year 2015-2016 to improvise the condition of Railways, there seem to be no relief for the passengers this year. Prabhu had some time back said that reduction in passenger fares is unlikely to happen although diesel prices have come down. The budget is expected to be inspired by Narendra Modi's Swachh Bharat Mission, Make in India initiative and hi-end technology.

With 'Swachh Bharat' expected to be the keyword in the Railway Budget, Prabhu may announce major steps to improve cleaning efforts comprising installation of bio-toilets in trains and stations, provisioning dustbins across all types of coaches. Introduction of Wi-Fi services on station premises might be introduced as another major highlight of the budget this year. The Railway Budget might explore the possibilities of Information Technology (IT) to enhance the security of railway passengers and to curb growing incidents of crimes against women commuters. The North-East is also expected to get priority in the upcoming budget as an announcement for introduction of local services to improve connectivity in the region is on the anvil. Proposals for innovative funding for infrastructure projects are also on the anvil. The cash-strapped Railways has a challenge of completing more than 300 pending projects requiring an investment of around 1.7 lakh crore. Prime Minister Narendra Modi's ambitious plan of Diamond Quadrilateral - connecting metros with high speed trains - would also be tabled at the Rail Budget session. To run semi-high speed trains on several corridors, the budget is likely to propose indigenously built coaches or trains that can run upto 200 km per hour speed. All the proposals are expected to be in tune with government's 'Make in India' initiative, report added.

The government had last year, notified the liberalised foreign direct investment (FDI) norms for rail infrastructure, allowing 100% FDI through automatic route in the sector. FDI beyond 49% in sensitive areas will require Cabinet approval on a case-to-case basis.

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