No Budget 2026 buzz as railway stocks slump up to 44% from last annual financial statement. What should investors do?

Railway stocks, which traditionally generate strong investor interest in the run up to the Union Budget, have failed to create any meaningful buzz this year. With Budget 2026 approaching, the sector’s performance remains largely muted, reflecting investor fatigue after a sharp post Budget correction in 2025.

Data shows that most railway linked stocks have delivered weak returns both in the past month and since the last Budget announcement.

Oriental Rail has been the biggest laggard, down over 44% from Budget 2025 levels, followed by Ramkrishna Forgings at 39% and Texmaco Rail at 32%. Key PSU names such as RVNL, IRCTC, Ircon International and IRFC have also struggled, declining between 18% and 26% over the same period.


Even stocks that saw pockets of recent buying interest have failed to offset earlier losses. Jupiter Wagons stands out with a 19% gain over the past month, yet it remains down 18% since Budget 2025. Container Corporation, RITES, RailTel and BEML have all posted single digit monthly moves while remaining firmly in negative territory on a Budget to date basis.

The lacklustre performance suggests that much of the optimism around railway capex may already be priced in, with investors now looking for fresh triggers rather than incremental Budget announcements.


Mitesh Dalal, Head of Broking at Sanctum Wealth, attributed the underperformance of railway stocks to relatively elevated valuations. He noted that the correction followed the government’s largely flat railway allocation in Budget 2025, which fell short of Street expectations for higher spending.

"The Indian rail stocks have underperformed the headline index as well as the broader market over the past year. Poor execution and misses on the results front also contributed to de rating and consequently underperformance over the past year versus the Nifty and the broader market," Dalal said.

Kranti Bathini, Director Equity Strategy at WealthMills Securities, also attributed valuations, slow execution and lower than expected capital allocation in 2025 as sentiment spoilers, highlighting the prolonged consolidation despite stocks now being fairly priced.

The current turmoil in the stock markets has only added to the worries, with little or no acceptance for railway stocks now, he said, adding that the next leg of the rally could come only if significant growth potential is seen by investors.

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Budget 2026 expectations

Dalal sees only a modest uptick in capital allocation for railways, with the focus remaining on improving safety mechanisms such as the Kavach system and Vande Bharat modernisation. "Kavach execution has been lagging, given the complexities around it, and a large part of the allocation could be the unutilised portion of last year’s allocation," he opined.

Axis Direct, in a note, has pegged the Union Budget 2026 to 27 allocation at Rs 12 to 13 trillion towards capex, implying a 10% to 15% year on year increase. Key focus areas are likely to include roads, railways, logistics infrastructure, defence and indigenisation of equipment, it said.

Meanwhile, BofA pegs capital allocation at around Rs 12.5 lakh crore, accounting for 3.2% of GDP in FY27. Within capex, the government’s focus could remain intact in strategic areas such as defence, railways and shipbuilding, the note said.

Bathini also expects double digit growth in capex, even as the government thrust appears to be shifting more towards consumption.

He remains bullish on wagon stocks such as Titagarh Rail Systems and BEML.

(Data inputs from Ritesh Presswala)

Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.