Shares of Indian Railway Finance Corporation Ltd (IRFC) have started showing signs of recovery after undergoing a prolonged and steep correction. On Wednesday, December 23, the stock rose by Rs 6.35 during the session, marking a gain of around 5.43 percent. This upward move came as railway-related stocks continued their rebound from recent lows, with the sector registering gains for the third consecutive trading session.
IRFC’s recent rise is notable given the sharp decline it had experienced earlier. The stock had touched an all-time high of Rs 229 in July last year, after which it went through a sustained correction phase. From its peak, the share price had fallen by more than 55 percent before stabilising and beginning to move higher again in the past few sessions. On the current trading day, IRFC was up more than 4 percent, adding to the momentum built earlier with gains of around 2.5 percent on Monday and nearly 3 percent on Friday.
Trading volumes in IRFC have also surged significantly, indicating renewed interest from investors and traders. By noon, close to 3 crore shares had already been traded, which is substantially higher than the stock’s 20-day average daily volume of about 40 lakh shares. Such a sharp rise in volumes typically suggests strong participation and improving sentiment around the stock.
Despite the recent recovery, one overhang that continues to influence investor perception is the government’s plan to reduce its stake in IRFC to comply with minimum public shareholding norms. As of September 30, the government still owned roughly 86 percent of the company. Any future stake sale could lead to an increase in supply in the market, which remains a key factor that investors are closely monitoring.
The strength in IRFC mirrors a broader recovery across railway stocks. Several railway public sector undertakings, which had corrected sharply in the recent past, have moved higher over the last three sessions. This recovery has not been limited to PSUs alone, as private companies linked to the railway sector have also seen strong buying interest.
Among the standout performers has been Jupiter Wagons. The stock has surged sharply, rising another 13 percent on Tuesday after jumping nearly 20 percent on Monday. Trading activity has been exceptionally high, with more than 9 crore shares already changing hands, far above its 20-day average volume of around 22 lakh shares. The stock gained momentum after promoters increased their holding following the conversion of warrants into equity shares.
Railway stocks have also found support from recent policy-related developments. Over the weekend, Indian Railways announced a rationalisation of passenger fares, which is scheduled to take effect from December 26. The fare increase applies only to long-distance journeys beyond 215 kilometres.
Under the revised structure, fares for Mail and Express trains, both non-AC and AC, will rise by 2 paise per kilometre. Ordinary class tickets will see a smaller increase of 1 paise per kilometre. Although the hike is modest, it is viewed positively as a step towards improving revenue without placing a heavy burden on short-distance passengers.
Another factor supporting sentiment in railway stocks is the upcoming Union Budget, which is due to be presented in February. Historically, railway-related stocks tend to attract buying interest in January ahead of the budget, as investors anticipate higher allocations for the sector compared to previous years. These expectations often lift sentiment and drive short-term momentum.
Overall, IRFC’s recent rebound reflects a combination of sector-wide recovery, unusually strong trading volumes, optimism linked to the forthcoming budget, and positive sentiment around incremental railway reforms. At the same time, investors remain cautious, keeping an eye on potential government stake sales and broader market conditions, both of which could play an important role in determining the stock’s next direction.
