Metal shares faced selling pressure on November 18 for various reasons, including a stronger dollar weighing on base metal prices.
On November 18, Nifty Metal index fell the most among 16 major sectors by trading 1.5% lower at 10,325.
Prices for base metals like copper and aluminium extended fall pressured by a stronger dollar. A stronger dollar makes commodities transacted in the greenback more expensive to investors using other currencies.
Hindustan Zinc and Hindustan Copper led the losses on the sectoral index by falling 3% each. Steel Authority of India (SAIL) shares fell over 2%.
On November 18, the dollar index was steady at 99.5, while Asian currencies were down between 0.1% and 0.6% as investors awaited the release of key US economic data this week, with the closely watched September nonfarm payrolls report due on Thursday.
So far in 2025, Nifty Metal index rose 19.5%, slightly more than double of the benchmark index's growth of 9.5%.
The sentiment around steel companies was hit following news reports about the government planning to suspend quality control orders on 55 steel grades.
Fading hopes of a rate cut in December by US Federal Reserve also contributed to the negative sentiment towards metal shares.
When the Fed keeps rates high the US dollar usually strengthens. Metals priced in USD (copper, aluminium, zinc, gold) become more expensive for global buyers.
The odds of a 25-basis-point rate cut by the Fed on December 10 have dropped to 42.9% from 62.4% last week, according to CME FedWatch.
Higher US rates make investments in emerging markets such as India less attractive for overseas investors.
investors awaited key US economic data releases that would offer cues on whether the Federal Reserve cuts rates next month.
Traders were also monitoring an intensifying diplomatic spat between China and Japan. The commodities trade between the two major economies could be affected if tensions rise further.
Industrial metals were caught up in a broader shunning of riskier assets ahead of key events this week including Thursday’s pivotal US jobs report that should influence the Fed’s next move. Several of the bank’s officials have cautioned against a further reduction in rates for now, hurting the demand outlook for commodities.
Aluminum surged to a three-year high in early November, with a swathe of analysts pointing to strong demand — particularly in China — and headwinds for global supply. But prices have drifted lower along with other metals on lingering concerns about the US economy and monetary policy.
Still, the recent pullback in London Metal Exchange prices masks some more region-specific changes in the aluminum market. Rio Tinto Group is imposing surcharges on metal it sells to the US, as inventories there start to run low in the wake of US President Donald Trump’s steep import tariffs.
With inputs from Bloomberg
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