Railway Stocks on Fire: What Sparked the Rally?

Railway Stocks Rally While Markets Hold Steady

The headline indices might have moved only a little — Nifty closed up 72 points and Sensex added 229 — but beneath the surface, momentum was clearly gathering. A strong railway stocks rally stole the spotlight, with Ircon and RailTel jumping over 12%, and several other PSU names riding the same wave.

Driving this enthusiasm were fresh government orders, rising hopes of capex-led growth, and a strong Services PMI reading of 58.8, reflecting both robust demand and record-breaking job creation.

In today’s newsletter, here’s what you’ll get:

• A breakdown of the most important market-moving news
• Nifty’s technical outlook with key support and resistance levels
• Stocks to keep on your radar today and why they matter
• A fresh high-risk, high-reward smallcap pick
• Your clear action plan before the market opens

The day’s top gainer was Eternal, up 3.36%, while Bajaj Finserv lost 1.8%. Midcaps led sectoral gains, while pharma remained sluggish.

Let’s now take a closer look at what happened globally and what it means for the Indian market today.

Global Cues Mixed, But Nifty Holds Ground: What the Charts Are Telling Us

Global markets were a mixed bag overnight. US indices were largely flat ahead of the critical jobs data due later this week, while Asian markets showed subdued moves amid uncertainty around global interest rate paths. However, Indian equities continued to show relative resilience — thanks in part to domestic strength and sector-specific triggers like the railway stocks rally.

Let’s turn to the charts to understand where the Nifty stands.

Technical Outlook: Nifty 50

The Nifty closed at 24,620.20, up modestly, but the bigger picture lies in the price structure. After a strong uptrend, the index has entered a tight consolidation range — forming what looks like a bullish flag pattern.

• Support Zone: ₹24,534 – ₹24,544
• Major Support Below: ₹23,800 – ₹23,804
• Resistance Zone: ₹25,079 – ₹25,100 (critical breakout point)
• Next Major Resistance: ₹26,266 (all-time high level)

What Can Happen Now?

• Bullish Breakout: A move above ₹25,100 with volume could open the gates to ₹25,600 and potentially ₹26,266.
• Bearish Breakdown: If ₹24,534 breaks with heavy volume, downside targets include ₹23,800 and ₹23,400.
• Sideways Play: If no decisive move, range traders can consider buying near ₹24,540 and selling near ₹25,070.

Volume will be the key to filtering out fake breakouts or breakdowns.

For now, the market remains in a wait-and-watch mode ahead of major policy cues and election clarity. But signs of accumulation beneath the surface suggest the bulls may still have some steam left.

Stock in Focus: Services PMI, HNI Tax Crackdown, and a Railway Boom

1. Services PMI Hits 58.8 – Job Creation at Record High

India’s services sector remained solid in May with the HSBC India Services PMI climbing to 58.8, slightly higher than April’s 58.7. In simple terms, anything above 50 means growth — and this marks another month of healthy expansion.

What’s fueling this?

• New client wins, repeat orders, and global demand (especially from Asia and Europe).
• Most notably, job creation hit an all-time high in the survey’s history, with 16% of firms adding staff.

Firms are clearly preparing for a bigger workload ahead. While input costs and wage bills rose, businesses remain optimistic, expecting marketing efforts and bigger teams to drive growth in the coming year.

Impacted Stocks: Watch midcap IT, staffing, travel, and hospitality players. Companies like NIIT, TeamLease, Thomas Cook, and Route Mobile could benefit from growing service demand and global expansion.

2. Railway Stocks Rally on Fresh Orders and Infra Push

The star of yesterday’s market: the Indian railway pack.

A combination of fresh government orders and a renewed capex signal sparked a railway stocks rally — with strong moves seen across the board:

• Ircon International: +12% after bagging a ₹1,068 crore EPC contract from East Central Railway.
• RailTel: +12% after tying up with Techno Electric to set up a 10 MW data centre in Noida.
• Texmaco, RVNL, IRFC, Titagarh, CONCOR: All gained 3–8%.
• BEML and IRCTC: Marginal gains but riding the sentiment wave.

With the government doubling down on infra, and strong Q4 GDP (7.4%) pointing to capex-led growth, this sector might remain in focus for the coming weeks.

Impacted Stocks: IRCON, RailTel, RVNL, Titagarh, IRFC, Texmaco — stay on your watchlist.

3. HNIs Under Tax Scanner: 7–8 Lakh People Earning ₹1 Cr+?

The tax department has a new target — High Net Worth Individuals (HNIs) who spend big but report modest income.

Officials believe 7–8 lakh taxpayers earn ₹1 crore+ annually, yet only about 3.5 lakh filed ITRs in that range.

What’s happening now?

• 360-degree profiling using TCS, TDS, GST, foreign remittances, and AI to track mismatches.
• Luxury goods (like watches, handbags, cars, tour packages) are being monitored via TCS.
• Authorities are looking at real estate, hospitality, and retail sectors where cash transactions are harder to track.

Impacted Stocks: Watch luxury goods retailers, real estate players, and companies catering to HNIs — especially if this crackdown changes consumer behavior or spending patterns.

4. Hyderabad Man Loses ₹72.55 Lakh in Fake Zerodha Trading Scam

A 43-year-old employee from Alwal, Hyderabad, fell victim to an online trading scam where fraudsters impersonated Zerodha representatives. The victim was convinced to use a fake app and deposit a large sum for bogus stock investments. Police have registered a cybercrime case to investigate the matter.

Impacted Stocks: Zerodha is not a listed company, so direct stock impact is limited. However, this scam could cause temporary negative sentiment in the retail brokerage sector and online trading platforms. Watch for cautious investor sentiment around NSE, BSE, and other tech-driven brokers.

5. Market At ‘Full Price’: BofA Prefers Defensive Sectors Amid Valuation Concerns

Bank of America’s analyst Amish Shah warns the market is trading at high valuations. The recommendation is to focus on rate-sensitive and defensive sectors such as telecom, hospitals, and domestic pharmaceuticals, which tend to hold up better in corrections.

Impacted Stocks:

• Telecom: Bharti Airtel, Reliance Communications
• Hospitals: Apollo Hospitals, Fortis Healthcare
• Pharmaceuticals: Sun Pharma, Dr. Reddy’s Laboratories, Divi’s Laboratories

6. RBI MPC Meet: Goldman Sachs Predicts Repo Rate Cuts in June and August

Goldman Sachs’ Chief India Economist Santanu Sengupta expects consecutive repo rate cuts to 5.5% in June and August, with GDP growth for FY26 likely to slow by 30 basis points due to global tariff pressures.

Impacted Stocks: Banks and real estate sectors could benefit from lower interest rates:

• Banks: HDFC Bank, ICICI Bank, Kotak Mahindra Bank
• Real Estate: DLF, Godrej Properties, Oberoi Realty

7. Domestic Demand to Anchor Growth Despite Global Drag, Says Morgan Stanley

Morgan Stanley forecasts India’s GDP growth to moderate to 6–6.2% over the coming quarters due to slower global demand. However, strong domestic demand led by government and household capital expenditure is expected to keep growth supported.

Impacted Stocks: Infrastructure and capital goods companies are likely beneficiaries:

• Larsen & Toubro (L&T), Siemens India
• Bharat Heavy Electricals Limited (BHEL), Tata Steel

Technical Radar: NFL Poised for Breakout Rally

Stock: National Fertilizers Ltd (NFL)
Last Close: ₹107.88

NFL has caught the attention of technical traders — and for good reason.

🔍 Chart Setup:
NFL has been grinding steadily upwards inside a rising channel for over two months, forming a classic uptrend of higher highs and higher lows. And now, the stock has attempted to break out of this rising channel — backed by a massive volume spike of 6.61 million shares.

It’s now just below the upper boundary of the channel, i.e., ₹109.80–₹110.

Key Technical Levels:

Zone	Levels
Immediate Support	₹104 – ₹105
Strong Base	₹90.15
Breakout Level	₹110
Resistance Targets	₹114 and ₹119–₹120

Strategy for Traders:

Bullish Setup (High Probability):

• Buy on dip: Between ₹105–₹106, with a stop-loss at ₹101.
• OR Buy breakout: Above ₹110 on a closing basis.
• Targets: ₹114 (minor resistance), ₹120 (major swing zone).

Bearish Setup (Low Probability):

• Avoid fresh longs below ₹100.
• Breakdown below ₹101 with volume could drag NFL down to ₹96 or ₹94.

📌 Verdict:
NFL looks ready for a short-term rally. With strong institutional buying and a breakout attempt in place, the momentum clearly favors the bulls. As long as the stock holds above ₹104, every dip is a buying opportunity.

Smallcap Gem of the Day: IGI India (IGII)

Stock: International Gemmological Institute (India) Ltd
CMP: ₹408
Market Cap: ₹17,627 Cr
Sector: Diamond Certification & Jewellery Grading

💎 Business Snapshot:
IGI India isn’t just any lab — it’s the world’s largest independent certification agency in the diamond and gemstone space. Whether it’s natural or lab-grown diamonds, studded jewellery or coloured stones, chances are IGI’s stamp of authenticity is on it.

And yes, they don’t just certify bling — they teach the science behind it too. With 31 global labs and 18 gemology schools, their footprint is sparkling across 10 countries.

📊 Financial Bling:

Metric	Value
P/E	41.2
ROCE / ROE	67.9% / 54.4%
Net Profit Margin	50.9%
Operating Margin	56.9%
Debt-to-Equity	Just 0.14
Cash Equivalents	₹388 Cr

This isn’t your typical smallcap. With margins this fat, a near debt-free balance sheet, and steady cash, IGI is built for stability and scalability.

📉 But Wait… The Stock’s Down 35% from Highs

IGI listed strong, surged to ₹642… and then cooled to ₹408. A classic post-IPO reality check. But here’s the kicker — the intrinsic value is estimated around ₹331, so it’s still a bit hot on valuation.

However, the quality of the business and monopoly-like positioning in a niche industry makes it worth tracking. Especially if it dips closer to ₹350–₹360 levels.

Analyst Take:

• What to love: Asset-light, global operations, rich margins, and a business that thrives even when gold prices rise (because people still want to know if it’s real).
• What to watch: Premium valuation, low float, and post-IPO volatility.

Verdict:
IGI India isn’t just grading diamonds — it’s becoming one in the smallcap space. High-quality numbers, rare business model, and a strong moat. Keep it on your radar — especially if the price slips closer to its fair value.

What To Do Now: Your Action Plan

✅ Index Outlook:
Nifty and Sensex look healthy after yesterday’s bounce, especially with strong Services PMI at 58.8. The overall undertone remains bullish — buy on dips is still the play, as long as Nifty holds above 22,550.

📦 Sectors in Focus:

• Railways & Capex Plays: Stocks like IRFC, RVNL, Texmaco, Titagarh, CONCOR — all rallied after the government’s railway capex announcements. Consider these for momentum trades or staggered entries.
• Defensive Bets: BofA likes telecom, hospitals, and pharma for valuation safety. So keep Bharti Airtel, Fortis, Cipla on your list if the market wobbles.

🔍 Technical Watch:

• NFL has given a volume-backed breakout. Watch ₹110. A close above it could unlock ₹114–₹120. It’s a buy-on-dips or breakout trade with stop-loss at ₹101.

💎 Smallcap Tracker:

• IGI India is a high-quality gem, with 50%+ margins and a monopoly-like position in diamond certification. Price is still rich, but if it dips closer to ₹360, it may be a solid long-term buy candidate.

📉 Macro Alerts:

• Goldman Sachs expects rate cuts in June & August. Good for rate-sensitive sectors like real estate, NBFCs, and autos.
• I-T Dept is hunting HNIs who don’t match their lifestyle with ITRs — could spook luxury stocks or cash-heavy sectors in the short term.

Stay nimble. Track volume + price movement in the top gainers (railways, PSU banks) but avoid chasing rallies. Use SBI, IRFC, RVNL strength to build into quality names on corrections.

Conclusion: Why This Market Needs Sharp Eyes (And Smart Tools)

The market may look calm on the surface after Railway stocks rally, but underneath—between booming railway stocks, rate-cut whispers, and the I-T department’s microscope on luxury spenders—it’s buzzing with signals. Some stocks are breaking out, some are breaking down, and some are just waiting for your attention.

This is not the market to go in blind. It’s the market to go in prepared.

And that’s where Angel One comes in.

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