Rail Vikas, Titagarh: Bullish trend in railway-related stocks may continue

Rail Vikas Nigam, Titagarh Wagons and Texmaco Rail & Engineering may soar up to 18 per cent in coming sessions

Despite the domestic market witnessing rout in the last week, with the BSE Sensex and Nifty 50 plummeting 2.70 per cent and 2.80 percent, respectively, in the previous two sessions, shares of railway-related companies will be in the limelight ahead of the Union Budget. 

Earlier, benchmark indices were stuck in a broad range and market participants were expecting it to breakout on the upside. However, due to unprecedented events the indices took a hit on the downside. 

The report of Hindenburg, a research firm which focus on short-selling, cited issues related to Adani group’s debt levels and tax evasions led to a major broad base sell-off in all the group entities. Most of the shares plunged close to their respective lower circuits on last Friday.

Meanwhile, barring Indian Railway Catering and Tourism Corporation, which lost 27 per cent, all other railway-related stocks have performed well so far since the last budget. Shares of Rail Vikas Nigam and Titagarh Wagons delivered double-digit gains, while Texmaco Rail & Engineering, Ircon International, and Rites rose over 25 per cent each. 

On Monday, Ircon International, Texmaco Rail & Engineering and Indian Railway Catering and Tourism Corporation soared 2 per cent despite overall sentiment staying sluggish, with markets trading on subdued note. 

Here’s the technical outlook of railway-related stocks ahead of the Union Budget 2023:-

Rail Vikas Nigam Ltd (RVNL)

Likely target: Rs 90 and Rs 95

Upside potential: 12% - 18%

Following the massive breakout of “Golden Cross” in the last October, the stock perceived a robust rally, with 50-day moving average (DMA) bolstering the upward bias.  The 50-DMA is positioned at Rs 71.50, as per the daily chart. 

Thus, as long as the stock defends this 50-DMA mark, the positive bias may retain the upward strength. A reversal over Rs 80 could lead the stock breakout in the direction of Rs 90 and Rs 95 levels. CLICK HERE FOR THE CHART

Titagarh Wagons Ltd (TWL)  

Likely target: Rs 250

Upside potential: 14%

Both, daily and weekly charts are indicating a bullish formation of “Higher High, Higher Low”, with underlying positive strength continuing to bolster lower supports. While there is a negative divergence of the Relative Strength Index (RSI), the price action has not slow down on the upward momentum, as per the daily chart. The support comes to Rs 200 and until the counter upheld this mark, the sentiment may garner a rally to Rs 250 level. CLICK HERE FOR THE CHART

Indian Railway Catering and Tourism Corporation (IRCTC)  

Outlook: Breach of Rs 600 could spell a bearish trend 

There is a bearish formation of a “Death Cross”, with the technical indicator Moving Average Convergence Divergence (MACD) in a process of making a negative crossover. If the stock breaks and sustains beneath Rs 600, then the MACD may form a bearish crossover suggesting that the counter has entered a bearish phase, with further downside seems inevitable. The stock could then break its 52-week low of Rs 555.90. CLICK HERE FOR THE CHART

Texmaco Rail & Engineering (TEXRAIL) 

Likely target: Rs 60

Upside potential: 12%

Since the last 7 months, the counter has been gradually rising upward, with a sluggish trend. While the upside has met with consecutive barriers, the positive bias has not yet abandoned the bulls’ side.  The crucial support is at Rs 48.90 level, which is its 200-DMA.  And as long as the stock trades over the 200-DMA, the trend shall remain in the positive grip rallying towards Rs 60. CLICK HERE FOR THE CHART

Rites Ltd (RITES) 

Outlook: Support of 200-DMA

While there is a negative formation of “Head and Shoulder”, on the daily chart, the selling pressure could only mount beneath the support of Rs 301, its 200-DMA. The trend would shift in bears favour when the stock negates this crucial support of Rs 301 mark, with aggressive volumes. 

On the other hand, a move over Rs 360 could restore the upward bias, turning sentiment in buyers’ side. This move would cross hurdles of 50-DMA and 100-DMA set at Rs 349 and Rs 351, respectively. CLICK HERE FOR THE CHART