Metal stocks extend rally; Vedanta, Nalco, Hindustan Copper zoom up to 6%

At 10:21 AM on Wednesday, the Nifty Metal index was the top gainer among the sectoral indices up 2 per cent, as compared to 0.23 per cent decline in the Nifty 50

Shares of metal companies, both ferrous and non-ferrous, were in demand on Wednesday, with the Nifty Metal index surging 2.7 per cent on the National Stock Exchange at the close in an otherwise tepid market. The Nifty Metal index was the top gainer among sectoral indices, while the benchmark Nifty 50 slipped 0.26 per cent.

 

Vedanta hit a new high of ₹679.45 before closing at ₹676, up 6 per cent. Hindustan Zinc touched a multi-year high, rising 6 per cent to ₹670 before ending 4 per cent higher at ₹655. Hindustan Copper gained 5 per cent to ₹569, while Tata Steel rose 4 per cent to ₹189.35. National Aluminium, Jindal Steel, and Steel Authority of India advanced between 2 per cent and 5 per cent.

 

 

Gold and silver hit fresh record highs as softer US inflation data strengthened expectations of Federal Reserve rate cuts this year. Ongoing geopolitical and economic uncertainty continued to drive safe-haven demand. Civil unrest in Iran and rising geopolitical tensions further supported buying interest in precious metals, said Rahul Kalantri, vice-president (commodities) at Mehta Equities.

 

Beyond macroeconomic uncertainty, structural demand remains firm, led by continued central bank gold purchases and rising industrial consumption of silver driven by solar energy, electric vehicles, artificial intelligence infrastructure, and electronics, even as supply constraints persist.

 

Since January 8, Vedanta shares have rallied 12 per cent, while over the past four months the stock has surged 51 per cent. Vedanta has a diversified portfolio of Indian and global assets across metals and minerals, including zinc, silver, lead, aluminium, copper, nickel, and oil and gas.

 

Icra said Vedanta is expected to report operating profit before interest, tax, depreciation, and amortisation of ₹48,500–49,000 crore in 2025-26 (FY26), supported by higher profitability from an uptick in key commodity prices such as zinc and aluminium, along with lower production costs as benefits from ongoing backward integration in the aluminium segment begin to materialise. Record-high silver prices are also expected to support profitability in the current financial year (FY26).

 

Vedanta shares have gained as investors respond positively to steady business performance and company updates. Fundamentally, the company continues to generate strong cash flows from its core businesses and reward shareholders through regular dividends, making the stock attractive for long-term investors. The proposed demerger has also lifted sentiment, as it is expected to unlock value and sharpen focus across businesses. However, high debt levels and volatility in metal prices remain key risks, said Ravi Singh, chief research officer at Master Capital Services.

 

Analysts at Kotak Institutional Equities expect a strong quarter for base metal players due to higher commodity prices in the third quarter (October–December/Q3) of FY26. Zinc, silver, aluminium, and alumina prices changed by +13.6 per cent, +43 per cent, +10 per cent and (-)10.1 per cent quarter-on-quarter, respectively, in dollar terms.

 

For Vedanta, the brokerage forecasts a 27 per cent quarter-on-quarter increase in earnings before interest, tax, depreciation, and amortisation (up 26 per cent year-on-year), driven by higher prices in the aluminium, zinc and silver segments and lower alumina costs, partially offset by hedged volumes.

 

Spot commodity prices and a weaker rupee suggest upside risks to earnings estimates for base metal producers. The extension of safeguard duty and subsequent steel price hikes should arrest the downgrade cycle for steel producers, the brokerage said in its sector update.

 

Meanwhile, seasonally, volumes typically pick up from Q3FY26, and this quarter was no exception. Most ferrous players reported high single- to low double-digit volume growth, partly aided by the implementation of safeguard duty in the last week of December 2025.

 

The Indian government imposed a final safeguard duty of 12 per cent in late December 2025, leading to a sharp rise in steel prices. Spot hot-rolled coil and rebar prices are already 7–8 per cent higher than the Q3 average, while coking coal prices rose 9 per cent.

Traditionally, the fourth quarter (January-March/Q4) is seasonally strong for volume growth, and the brokerage expects a sharp rebound in margins during the quarter. January–June is the peak demand season for steel in India, which, coupled with better prices, could benefit steelmakers, ICICI Securities said in its metals and mining Q3FY26 preview. 

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