Railway stocks tumble; Stone India, Kernex, Texmaco worst hit

Railway related stocks plunged on Tuesday after the Railway Minister Pawan Kumar Bansal announced a disappointing Rail Budget for 2013-14. Stone India dropped the most with fall of 16.21%, followed by Kernex Microsystems (15.13%), Texmaco Rail (11.36%), Hind Rectifiers (8.82%), Titagarh Wagons (8.14%), BEML (2.80%) and Bartronics (0.6%). On the other hand, Zicom Electronic was the only gainer with rise of 4.24%."There were no fireworks in the rail budget. While linking freight to fuel costs is the right move, subsidized passenger fares account for bulk of rail losses and until that is addressed, the financial position of railways is unlikely to turn around quickly, and investment in the sector will languish," says Sonal Varma, economist, Nomura Financial Advisory and Securities (India).While DK Aggarwal, CMD, SMC Investments & Advisors said, "Given the state of Railway Finances, this budget can be termed as a balanced budget but certainly cannot be termed as growth boosting budget at the time when the expectations from the government is high."The Railways Minister announced a plan to link freight charge revisions to fuel costs. As diesel prices have risen recently, freight rates were increased by around 5%, which raises transportation costs for bulk goods. Passenger fares were not affected, perhaps because they were hiked by around 21% a month ago in a non-budget related move. But, charges for super-fast trains will rise, as will fees for ticket cancellation and reservations. Gross budgetary support to railways has risen by 8% y-o-y to Rs 260 billion in FY14 versus a 20% rise in the FY13 budget.