Metal, realty stocks tumble up to 3% as US Fed's hawkish stance weighs in

US Federal Reserve kept its key interest rates unchanged, as against widespread expectations of a rate cut

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26 Aug, 2025 12:21

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The shares of metal and real estate companies tumbled on June 19, as no rate cuts from the US Federal Reserve sent jitters to the market. The sharp fall in the share prices pushed the Nifty Metal index down nearly 1.3 percent to hover around 9,040, while the Nifty Realty index was down 1.6 percent to stand at 993.

Both the indices have now extended losses for the third consecutive session, and are currently among the top sectoral losers on the stock market.

US Federal Reserve kept its key interest rates unchanged, as against widespread expectations of a rate cut. While announcing the American central bank's decision, Federal Reserve Chair Jerome Powell said that he expects 'meaningful inflation' ahead, as consumers pay more for goods due to the massive tariffs announced by the Trump administration on imports.

"Everyone that I know is forecasting a meaningful increase in inflation in coming months from tariffs, because someone has to pay for the tariffs ... between the manufacturer, the exporter, the importer, the retailer…People will be trying not to be the ones who can pick up the cost. Ultimately, the cost of the tariff has to be paid, and some of it will fall on the end consumer," he said during a press conference after the policy decision.

Although the US Fed kept rates unchanged, it expects to cut rates by half percentage point by the end of this year. However, more policymakers are now expecting to make no rate cuts at all in the near future than before, given the dismal inflation projection.

Notably, no rate cuts by the US Federal Reserve may have hiked investors' concerns over the possibility of India's RBI mirroring the stance. The Reserve Bank of India (RBI) had cut its policy repo rate by 50 basis points earlier this month. RBI Governor Sanjay Malhotra however recently remarked that the central bank is not ruling out more rate cuts, provided inflation continues its downward trend and remains below its projections.

Rate cuts by RBI make home loans more attractive for home buyers, which boosts demand and thereby the real estate stocks. A boom in the real estate sector trickles down to the metal industry, as it is inextricably linked to construction and other activities, and thereby boosts the metal stocks.

Hence, US Fed's hawkish stance may have raised investors' concerns. Phoenix Mills, Brigade Enterprises, Godrej Properties, DLF and other realty stocks dropped up to 3.4%, while those of Hindustan Copper, Hindustan Zinc, National Aluminium (Nalco), Welspun Corp, Hindalco, SAIL, NMDC, Tata Steel and other metal stocks dropped up to 4 percent.