At the Bombay Stock Exchange (BSE), shares of wagon maker Texmaco Rail and Engineering grew 7.11 percent to trade at Rs 97.90 around 1.00 pm rising from its previous day's close of Rs 91.40.

Scrip of Kalindee Rail Nirman (Engineers) increased 5.00 percent at Rs.96.65, moving up from Rs.92.05.Stocks of another wagon manufacturer Titagarh Wagons reported gain of 2.31 percent at Rs.239.30.

Shares of Hind Rectifiers slipped 4.94 percent to trade at Rs 47.80.Rail construction company Stone India's scrip rose 4.88 percent at Rs 36.55 from its previous close of Rs 34.85.  

The healthy gains in railway related stocks came a day after government approved a proposal to allow 100 percent FDI for building railways infrastructure.

Foreign capital in railways was not allowed till now.

However, the new government led by Prime Minister Narendra Modi has been pushing for it to build infrastructure projects such as high-speed railways and railway lines to and from coal mines and ports.

Currently, the cash-strapped railways cannot fund these projects without private participation. Foreign players from Japan and China are said to be keen to participate in building up of the infrastructure.

The proposal sought to allow FDI participation in erecting projects relating to electrification, high-speed tracks and suburban corridors.

Last-mile connectivity to boost business activity in and around ports and mines has been proposed through formation of special purpose vehicle (SPV) companies under the public private partnership (PPP) model.

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