Shares of metal companies were sharply higher on September 3, extending gains on weaker dollar and taking the Nifty Metal index higher by more than 3 percent to extend gains for a third session.
Tata Steel shares are the top gainers on the index, rising nearly 6 percent, while SAIL and Jindal Steel & Power shares jumped more than 5 percent each. Hindustan Copper shares rose nearly 5 percent.
Welspun Corp and Hindalco Industries shares jumped over 3 percent each, while JSW Steel shares rose nearly 3 percent. NMDC and Vedanta shares were up around 2 percent each, while Hindustan Zinc and shares were up around 1 percent.
Here are some key factors driving the stocks higher:
Weaker Dollar
The US dollar has seen recent weakness after one report by DBS said, quoted by Reuters said that Trump's appointments to the Fed are likely to further weigh on the dollar. "Already, the labour market is softening, and Chair Powell has signalled the possibility of rate cuts at Jackson Hole," the note said. "This means that the overvalued USD could ease again as markets anticipate coming Fed rate cuts."
A weaker dollar improves global demand for commodities, like metals, which in turn benefits Indian metal companies through higher export opportunities and better pricing.
China's Plan to Cut Steel Output
China has plans to cut steel production between 2025 and 2026, according to an official document reviewed by Reuters, in an effort to tackle overcapacity. A reduced steel output from China will likely lower dumping of cheap metals into the Indian market, which in turn could benefit Indian metal players. CLSA said it expects the spreads to improve and Indian mills to see a rise in their profitability, according to the note cited by CNBC-TV18.
CLSA tweaked FY26-28 EBITDA estimates for metals and mining companies under its coverage by -4 percent to +8 percent. It noted that it continues to favour aluminium, given tighter demand-supply balance.
GST Reform Hopes
The GST Council, chaired by Finance Minister Nirmala Sitharaman, is meeting in New Delhi on September 3-4 to deliberate on the Centre's proposal for a simplified two-rate structure of 5 percent and 18 percent. "GST reforms and rate cuts together can spur growth by lowering compliance costs, improving efficiency, and boosting affordability. Reduced GST on housing or construction inputs supports real estate demand, while cheaper financing from rate cuts aids both homebuyers and capital-intensive industries like metals," said Pranay Aggarwal, Director and CEO of Stoxkart.
US Fed Rate Cut Hopes
US Federal Reserve Chair Jerome Powell on August 22 had said that a weaker job market may soon force the American central bank to cut interest rates. "Downside risks to employment are rising," according to Powell's remarks at the Jackson Hole Economic Policy Symposium, last month.
Most investors now expect a 25 bps Fed rate cut during its upcoming meeting on September 16-17. A rate cut in the US could reduce borrowing costs for foreign investors, encouraging them to invest in higher growth markets such as India, potentially boosting metal stocks.
Also Read: Our LIVE blog on stock market updates
Strong Q1 GDP
Indian economy grew 7.8 percent in the June quarter, beating RBI's 6.5 percent projection and the 6.6 percent median recorded in a Moneycontrol poll. A stronger GDP growth may spur confidence in Indian economy's growth, which in turn can boost the metal stocks.
“While domestic demand remains subdued, the market is pinning its hope on post-monsoon recovery, government capex, and GST recalibration. Recent developments would lead to a tighter pricing range, adding duration to earnings and potentially boosting valuation,” said Emkay Global while noting that its key picks in the sector are Tata Steel and SAIL.
MOIL, which is not part of the metal index, saw its share price rise by nearly 5 percent. This came after the company reported its best-ever August production with 17 percent growth on-year to 1.45 lakh tonnes. “On the sales front, the company also delivered strongly with 1.13 lakh tonnes of sales in August 2025, reflecting a remarkable 25.6% growth year-on-year. Further, during April–August 2025, MOIL recorded its best-ever performance with 7.92 lakh tonnes of production (up 9.3% y-o-y) and 50,621 meters of exploratory drilling (up 8.6% y-o-y),” it added.
(With inputs from Reuters)
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