Nifty Metal index hits record high on May 21; what's fuelling the rally?

Nifty Metal hits record high: The Nifty Metal index surged 3.45 per cent on Tuesday, to hit a record high of 9,944.65 points. By comparison, the Nifty50 index saw a modest increase of 0.16 per cent, and was trading at 22,537.85 points, at 12:35 PM.

The surge in the metal index, analysts believe, is largely credited to Vedanta's robust Q4 performance and its first interim dividend declaration of Rs 11 for FY25, which has considerably bolstered the index on its own.

Currently, Vedanta is trading at its highest level since May 2010. The stock had hit a record high of Rs 494.30 on April 8, 2010. In the past two months, the market price of Vedanta has appreciated by 75 per cent. READ MORE

The surge in the metal index is further fuelled by the increasing prices of commodities like Zinc and Copper and increase in manufacturing activities across the globe, said Ambareesh Baliga, an independent market analyst.

Of the 15 stocks, 11 showed gains while 4 experienced losses at 12:40 PM. Hindustan Zinc and Vedanta led the gains with increases of 10.76 per cent and 5.77 per cent respectively. Other notable gainers include Jindal Steel (4.46 per cent), Hindalco (4.04 per cent), Tata Steel (3.83 per cent), JSW Steel (3.48 per cent), Aani Ent (3.30 per cent), APL Apollo (2.74 per cent), SAIL (2.28 per cent), NMDC (1.66 per cent), and Hind Copper (0.66 per cent).

On the flip side, Welspun Corp led the losses with a decline of 1.91 per cent, followed by JSL (down by over 1 per cent) and Nalco (down by 0.65 per cent).

In a note on May 9, Elara Capital said, “In the past four months, coking coal prices have fallen approximately 29 per cent, which should lead to recovery in margin for domestic steel companies in Q2FY25. However, the widening gap between domestic & international steel prices and capacity addition are likely to prevent further sharp recovery in margin in the medium term.” 

On the aluminium front, Elara Capital said, rising prices on the back of supply disturbance should bolster firms’ margin in Q1FY25 bouncing back to a two-year high.