NALCO, Hindalco rally up to 4% as aluminium prices rebound

The Nifty Metal index surged 2.5% led by Hindalco, NALCO and Hindustan Copper as aluminium prices rose over 5% from recent lows in July.

The Nifty Metal index surged 2.5 per cent to a high of 12,822 in intra-day trade on Friday led by strong gains in National Aluminium Company (NALCO) and Hindalco on the National Stock Exchange (NSE).  The buying at metal counters can be attributed to a rebound in base metal prices, mainly aluminium in recent trading sessions.  Among individual stocks, Hindustan Copper and NALCO gained around 4 per cent each at ₹506 and ₹363, respectively. SAIL also rallied over 3 per cent. At 11 AM, the Metal index was up 2.1 per cent at 12,769 as against a 1 per cent gain on the Nifty 50.  Among others in the Nifty Metal index - Adani Enterprises, Lloyds SME, JSW Steel, Hindalco, Hindustan Zinc, Tata Steel and Jindal Steel gained around 2.5 per cent each.  On the BSE, NSE, metal stocks are witnessing a rebound gaining up to 6 per cent in the month of July thus far, after falling up to 20 per cent in June owing to profit-taking and US tariff-related concerns. 

Aluminium prices up 5% from recent lows

  In the commodity space, Aluminium prices have gained over 5 per cent in the last six trading sessions from the lows in July.  According to reports, aluminium prices increased as commodity traders focused on supply shortage forecasts amid despite recent diplomatic developments in the Middle East.  According to investing.com, Aluminium stocks in LME-approved warehouses declined over 40 per cent since January, and stood at 295,550 tonnes - its lowest level since September 2022.  Among other base metals, Lead, Nickel and Zinc prices appreciated in the range of 2-3 per cent from July lows. 

Metals Q1 preview

  For the metal sector, JSW Steel will kick-start the Q1 earnings season next week with the company scheduled to announce results on July 17.  Analysts believe that metal companies may report a strong set of numbers for the June quarter, as prices of Iron ore, Aluminium and Zinc rose on a quarter-on-quarter basis.  ALSO READ | Metal companies may post stronger Q1 on higher prices, better realisations  Base metal companies are expected to report a healthy quarter, supported by higher LME Aluminium prices and stronger Sulphuric Acid prices, said analyst at Equirus Securities.  "Hindalco's India business should benefit from higher Aluminium realisations, partly offset by hedge losses, while the Copper business is likely to benefit from higher external Sulphuric Acid sales despite continued pressure from negative TcRCs," the brokerage said in a note.  Adding that, Novelis' margins are expected to improve sequentially, driven by higher shipments, the restart of the Oswego facility and continued mitigation of tariff-related headwinds. Overall, Equirus expects Hindalco's consolidated earnings to remain robust on both a YoY and QoQ basis.  Disclaimer: Views and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Reader's discretion is advised.