Multibagger railway stock on a roll, overbought on charts; should you buy on dips?

Shares of RailTel Corp have rallied 46% in a month, turning overbought on charts with a relative strength index (RSI) of 81.2. The multibagger stock has a one-year beta of 1.7, indicating very high volatility during the period. However, in the current session, RailTel shares fell 4% to Rs 441.05 against the previous close of Rs 461.05 on BSE. Market cap of the firm slipped to Rs 14,252 crore. Total 2.94 lakh shares of the firm changed hands amounting to a turnover of Rs 13.11 crore. Later, RailTel shares ended 3.68% lower at Rs 441.10 on BSE. 

The multibagger railway stock has risen 342.55 per cent in three years and gained 247.90 per cent in two years. The stock fell to a 52-week low of Rs 265.30 on March 3, 2025 and rose to a record high of Rs 618 on July 12, 2024. The stock has slipped 28% from its 52 record high. 

Ravi Singh, Senior Vice President of Retail Research at Religare Broking said, "The stock prices showed a robust bullish momentum with gains of nearly 15 per cent in the last two trading sessions, taking cues from fresh order announcements from central railways to improve railway infrastructure. On the daily chart prices witnessed a robust breakout from the resistance level of Rs 420-430 with substantial increase in trading volume. Observing current market scenario, it is advisable to consider 'Buy on Dips' until stock is trading above strong support of Rs 400, where 21- Day EMA is also supporting active Put OI build up. A fresh buying can be placed near the price band of Rs 420-430 with risk limited below Rs 400. Additionally, we recommend holding existing long positions with stop loss at support level of Rs 400."

AR Ramachandran, SEBI registered independent analyst says, "Railtel is bullish on the Daily charts but also overbought with next resistance at  Rs 474.  Investors should be booking profits as a Daily close below support of Rs 443 could lead to a target of Rs 407 in the near term."

B Krishnakumar, Senior Technical Analyst, Definedge Securities said, "After several months of underperformance, the Nifty Railway PSU Index has staged a remarkable comeback in the past few days. Railtel, a part of this index, has also posted an appreciable gain recently. Short-term outook is bullish and the next resistance for Railtel is at Rs 515-520. Short-term bullish outlook would be under threat if the price drops below the support zone at Rs 370-375."

RailTel Corporation is a Navratna PSU and is one of the largest neutral telecom infrastructure providers in the country owning a pan-India optic fiber network on exclusive right of way (ROW) along railway track. The company's segments include telecom services and project work services.