Metal stocks strongly surged on June 6 after RBI reduced its policy repo rate by 50 basis points, higher than the expected 25 bps rate cut. The sharp rise in the share prices pushed the Nifty Metal index 1.4 percent higher teto hover around 9,360 in the afternoon.
The rally in metal stocks is in line with several rate sensitive sectors like banks and realty, as well as the overall stock market. Sensex surged nearly 800 points to hover around 82,240, while the Nifty 50 index jumped over 1 percent to cross 25,000.
JSW Steel was the top gainer on the Nifty Metal index, soaring over 4 percent to trade at Rs 1,010 per share. Jindal Stainless Steel shares followed, jumping over 3 percent. Hindustan Zinc shares meanwhile were up nearly 2 percent, buoyed by the bull run in silver prices.
Welspun Corp, National Aluminium Company (NALCO), Hindustan Copper, NMDC and Adani Enterprises shares were up over 1.6 percent, while Jindal Steel & Power, Hindalco and Tata Steel were up over 1 percent each. Steel Authority of India (SAIL) and Vedanta were meanwhile trading with marginal gains.
RBI Governor Sanjay Malhotra announced that the Monetary Policy Committee (MPC) has cut the central bank’s policy repo rate by 50 basis points to 5.5 percent from 6 percent earlier. RBI has also decided to change its stance to 'neutral' from 'accommodative'. RBI also slashed the Cash Reserve Ratio by 100 bps to 3 percent from 4 percent.
Notably, the higher than expected rate cut is likely to bring a major relief to new home buyers. This expectation boosted real estate stocks, with the Nifty Realty index rallying over 4 percent. Metals, which are a key raw material in the real estate industry, also saw a rise in stock prices on higher demand hopes.
The RBI MPC reduced the inflation projection for FY26 to 3.7 percent to 4 percent earlier. The GDP growth projection remained unchanged for FY26 at 6.5 percent.
"The Indian economy presents a picture of strength, stability, and opportunity. First, strength comes from the strong balance sheets of the five major sectors - corporates, banks, households, government, and the external sector. Second, there is stability on all three fronts – price, financial, and political – providing policy and economic certainty in this dynamically evolving global economic order. Third, the Indian economy offers immense opportunities to investors through 3Ds – demography, digitalisation and domestic demand. This 5x3x3 matrix of fundamentals provides the necessary core strength to cushion the Indian economy against global spillovers and propel it to grow at a faster pace," he said.
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