Metal Stocks Bleed as Nifty Metal Index Heads for Worst Week in Four Months
India's metal sector witnessed intense selling pressure on Friday, November 21, with the Nifty Metal index declining 1.50% to 10,230 levels, putting it on track for its worst weekly performance since July. The index has fallen 2.50% this week, marking the most significant weekly drop in four months as several major constituents faced sharp declines.
Key Stocks That Led the Decline
Among individual performers, Hindalco Industries emerged as the top laggard, plummeting 3% to ₹776 per share. The company's decline was compounded by reports of another fire incident at Novelis' Oswego plant last month, adding to the overall weak market sentiment.
The selling pressure extended across the sector with Hindustan Copper, Jindal Stainless, NALCO, Hindustan Zinc, Jindal Steel, and Welspun Corp all slipping between 1.5% and 2%. Other significant players including NMDC, JSW Steel, Tata Steel, Vedanta, and Steel Authority of India (SAIL) also traded with losses exceeding 1%.
Double Whammy: Strong Dollar and Policy Changes
The metal sector faced a dual challenge this week. The US Dollar Index held firmly above 100 and is set to gain nearly 1% for the week amid expectations that the Federal Reserve will maintain current interest rates in December. A stronger dollar makes commodities priced in greenback more expensive for investors using other currencies, directly impacting demand.
Simultaneously, the government extended exemptions from mandatory quality control orders on select steel and stainless-steel grades. This move is expected to increase imports into the country and potentially put additional pressure on domestic prices, creating further headwinds for local manufacturers.
Commodity Markets and Profit Booking Add to Pressure
Base metal prices reflected the challenging environment with benchmark three-month copper on the London Metal Exchange dropping 0.39% to $10,696.5 per ton, poised to end the week down 1.41%. Aluminium prices also declined by 0.73%, indicating broader commodity market weakness.
Market analysts also pointed to profit booking as a contributing factor to today's decline. The sustained rise in metal stocks that pushed the Nifty Metal index up 6% in October and 10% in September prompted traders to lock in some gains. Despite the recent correction, the index remains up 18.30% so far in 2025, indicating the magnitude of the previous rally.
The mixed US jobs report did little to change the outlook for Federal Reserve policy, maintaining pressure on commodity markets and suggesting that the metal sector might continue facing challenges in the near term.
