Electrification to boost rail stocks, momentum is picking up

Railway stocks are seen gaining grounds on the bourses. The stock prices are moving in line with the news of electrification of railway lines. Indian Railways is scheduled to kick-start the electrification of 8000 km rail lines every year to achieve its network electrification target within the next five-year plan. With this, the railways would be able to save Rs. 10,500 crore in fuel bills, which currently stands at Rs. 26,500 crore on an annual basis. Also, the railways are looking forward to cutting costs of projects by 20 per cent and plan to tender bigger contracts. This would prove beneficial for the rail and related stocks like ABB, BHEL, Kalpataru Power, KEC International, Siemens etc.

Considering the three major rail stocks of TWL, Texmaco Rail and Cimmco, technically they are on the verge of their prolonged multiple resistance breakouts discounting the news in the prices. The stocks have either broken or attempting a breakout of the multi-year resistances where TWL is already trading above its prior resistance of Rs. 166 and approaching its next important resistance of Rs. 174. Texmaco Rail has a multiple resistance at 117-118 on a closing basis and after 3 weeks of consolidation, the stock is yet again heading northwards with rising volumes and oscillators above 60 as it breakouts of the strong resistance zone. Even Cimmco is on the verge of its resistance at 108, followed by 132 levels in the medium term.