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Indian Railways related stocks have been surging in the past few months with shares like Indian Railway Finance Corporation Ltd (IRFC) generating over 51% and Rail Vikas Nigam Ltd (RVNL) delivering 96% returns in the last month. Meanwhile Ircon International shares have also surged over 30% during the last month.

"Railway stocks generally gather movement before budget on anticipation of some announcement from the government. IRFC and RVNL share prices are also holding strong on technical setup as Investors are hoping some railway based capital expenditure announcements. The stocks IRFC and RVNL may touch the target of 42 and 90 levels respectively till the budget," said said Ravi Singh, Vice President and Head of Research, Share India.

Shares of IRFC, a dedicated market borrowing arm of the Indian Railways, have been trading around its record high levels. Meanwhile, RVNL shares have multibagger return of more than 127% in 2022 (year-to-date or YTD) so far. RVNL is involved in building rail infrastructure.

“Shares of IRFC, RVNL, RITES, Titagarh Wagons, Texmaco Rail and Engineering, and Railtel Corporation of India have increased by between 18 and 147% over the last three months. Typically, railroad stocks are used as a tactical play. This indicates that investors are purchasing these equities as a short-term investment wager in anticipation of a government declaration. Investor enthusiasm for the industry, particularly the publicly traded railway companies, was further buoyed by a news story that the government may sell up to 10% of its share in RailTel, RVNL, and four other public railroad companies," said Manoj kumar Dalmia, Founder and Director, Proficient equities Private limited. 

On the other hand, domestic brokerage and research firm Anand Rathi has picked Texrail stock is its top pick for the month amid witnessing huge traction on all the railway related stocks.

“TEXRAIL has been consolidating for quiet some time and recently we witnessed a fresh range breakout in the stock. We expect the stock to catch up its peers in the coming weeks. Thus, we advise traders to buy the stock near 63.50 with a stop loss of 57 for upside target of 75," the brokerage said.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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