IRFC shares jump over 5% today: Why the railway stock is rising

Shares of Indian Railway Finance Corporation (IRFC) surged over 5% in Tuesday’s trading session as railway stocks continued their rebound after a prolonged correction. The rally marks the third consecutive day of gains for the railway sector, driven by higher trading volumes, policy developments, and growing optimism ahead of the Union Budget.

IRFC stock climbed by Rs 6.35 during the session, translating to a gain of about 5.4%. The rally comes after the stock had corrected sharply from its all-time high of Rs 229 recorded in July last year. From those levels, IRFC had fallen more than 55% before showing signs of recovery in recent sessions.

The stock has now gained over 4% in the current session, following a rise of nearly 3% on Friday and about 2.5% on Monday, indicating renewed buying interest.

Sharp rise in trading volumes

A key highlight of the day’s move has been the surge in volumes. Nearly 3 crore IRFC shares were traded by noon, significantly higher than the stock’s 20-day average volume of around 40 lakh shares. Such a spike in volumes typically reflects strong participation from traders and short-term investors.

Railway stocks rebound across the board

IRFC’s rise is part of a broader recovery in railway-linked stocks. Several railway PSUs and private sector companies have witnessed strong buying over the past three sessions after a sharp sell-off earlier.

Shares of Jupiter Wagons, for instance, have been among the top gainers, rising sharply after promoters increased their stake through warrant conversions. The stock has seen unusually high volumes, reinforcing bullish sentiment across the railway space.

Fare hike supports revenue outlook

Sentiment around railway stocks has also improved following recent announcements by Indian Railways. The railways have announced a rationalisation of passenger fares effective December 26.

Under the new structure, fares for Mail and Express trains will rise by 2 paise per kilometre for long-distance travel beyond 215 km, while ordinary class fares will increase by 1 paise per kilometre. Though modest, the move is seen as a positive step toward improving revenue without significantly burdening passengers.

Union Budget expectations add momentum

Another major factor driving the rally is anticipation ahead of the Union Budget of India, scheduled for February. Historically, railway stocks tend to attract buying interest in January as investors expect higher budgetary allocations for infrastructure and rail modernisation.

Overhang of government stake sale

Despite the current rally, investors remain watchful of the government’s plan to reduce its stake in IRFC to comply with minimum public shareholding norms. As of September 30, the government held around 86% stake in the company. Any future stake sale could increase supply in the market and cap upside in the near term.

What’s driving IRFC today

Overall, IRFC’s rise reflects a combination of:

• Sector-wide recovery in railway stocks

• Strong surge in trading volumes

• Positive sentiment from fare rationalisation

• Budget-related expectations

However, market participants continue to track broader market trends and potential stake dilution, which could influence the stock’s next move.