Five railway multibagger stocks including IRFC, RVNL, RailTel Corp nosedive up to 20% – here’s why

In the past couple of days, the Indian market has been plummeting, and today's trading session made things even worse, especially for small-cap and mid-cap stocks. Many stocks that were highly favored by retail investors are now experiencing significant declines, sparking surprise and worry among investors about their portfolios.

One sector feeling the brunt of this downturn is the railway sector, which had been a favorite among retail investors for the past year. However, today's trading saw heavy selling pressure in this sector, fueled by the overall sell-off in mid-and small-cap stocks.

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Shares of RailTel Corporation of India ended today's session with a drop of 20% at ₹308.25. However, the stock still holds a 183% gain in a year. Similarly, Ircon International witnessed substantial selling pressure, with its stock finishing today's session with a drop of 10.77% at ₹185.20 apiece and it is down 18% in a week. 

Indian Railway Finance Corporation also saw its shares tumble over 9.14% in today's session to ₹124.25 apiece. Other railway multibagger stocks, such as Rail Vikas Nigam and Indian Railway Catering & Tourism Corporation, also ended today's session with a fall of 9% and 4%, respectively.

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Looking the small-cap stocks' performance today, a staggering 98 stocks within the Nifty Small Cap 100 index closed in the red, causing the index to plummet by 5.28%. This marks the sharpest intraday decline witnessed so far this year. Within just three trading sessions, the index has shed 1,414 points, translating to a 9% decrease, pushing it to reach its lowest point in 11 weeks.

Similarly, the Nifty Mid Cap 100 index also saw a significant drop of 4.40%, contributing to its overall decline of 6.12% for the week. This marks the third consecutive week of bearish movement for the index.

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The downward trend in small-cap stocks was triggered by concerns raised by market regulator SEBI regarding the froth building up in small-cap and mid-cap segments. This prompted the Association of Mutual Funds in India (AMFI) to instruct mutual funds to conduct stress tests once every 15 days, the first of which should be published by March 15.

Meanwhile, the sell-off in mid- and small-cap spread to large-cap stocks, with the Nifty 50 falling 1.51% today to 21,997.70 points, the third-largest intraday decline this year.

Mr Rahul Sharma, Head of Technical and Derivatives Research at JM Financial Services, said, "It seems like large caps have joined the correction in small caps and midcaps, which have been under severe selling pressure in the last few days."

"Nifty has a derivatives support at 22,000, so any sustenance below the same should be taken as an indication of caution for longs. The only silver lining today has been in select private banks and FMCG stocks, which have held their ground amidst a market-wide selloff," he added. 

Disclaimer: We advise investors to check with certified experts before taking any investment decisions.