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Synopsis
Three sectors witnessed a strong re-rating just before the general election in early 2024. They were: Defence, power, and railways. Practically all companies in the whole chain of these three sectors witnessed a sharp re-rating and stock prices moved up sharply. However, in the past few months, stocks from these sectors, especially railways, have been sort of underperforming. The slide began even before the current corrective wave started in October. The question is: Should you move out of these stocks? Or stay put at a time even the analyst community is not very bullish on these stocks?
Government spending and policy initiatives were the main reasons for companies in the defence, power, and railways sectors seeing a sharp improvement in their performance and for their stocks to be re-rated before the general elections last year. Now, all these stocks have seen underperformance in the past few months. In fact, as mentioned above, their underperformance began even before the major corrective phase was sparked by FII selling in
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