Metal stocks snap 7-session gaining streak as commodities tumble, Hind Zinc, NMDC shares fall up to 3%

Metal stocks jump

• Metal stocks fell up to 3 percent, snapping a seven-day winning streak
• Drop driven by sharp declines in gold, silver, and copper prices
• Nifty Metal index hit a 52-week high before closing down 0.16 percent

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The shares of metal companies snapped a seven session gaining streak on December 29, with heavyweights like Hindustan Zinc, NMDC and others falling up to 3 percent. This comes as commodity prices like gold, silver and copper declined sharply.

The sharp fall in the metal stocks today pushed the Nifty Metal index down 0.16 percent to 10,789.10 on Monday. Earlier during the day, the index hit a fresh 52-week high of 10,983.20.

Why metal stocks declined sharply today?

The sharp fall in the metal stocks was mainly driven by the sudden drop in metal prices. The prices of gold, silver and copper sharply dropped on December 29, after seeing a significant bull run. Easing geopolitical tensions and China’s export restrictions were among four key reasons behind the downturn.

Why were metal stocks rising earlier?

The earlier sharp rise in the metal stocks was supported by a favourable global macro setup rather than a single trigger, said Harshal Dasani, Business Head at INVasset PMS. "Recent sessions saw Nifty Metal and key names like Hindustan Copper, Hindalco, Vedanta and SAIL push to fresh highs, aided by broad-based buying across ferrous and non-ferrous counters. Turnover has picked up, signalling institutional interest returning after a weak November," the analyst said.

Fed rate cut hopes: The sharp rise in metal stocks came on the back of rising metal prices, due to expectations of rate cuts by the Federal Reserve in US in 2026, said Aditya Welekar, Senior Research Analyst - Metals, Axis Securities. "The easing labor market in the U.S. provides the Fed with the opportunity to lower rates, which bodes well for the metals market," he said.

China's policy support: A key driver has been China, where incremental policy support for infrastructure, power grids, renewable energy and urban redevelopment is improving demand visibility for steel, copper, aluminium and zinc, Dasani added. “While the property sector remains weak, state-led capex and industrial activity have stabilised, helping metal prices find a floor,” he said.

Tight supply: Tight inventories across several base metals have further limited downside risk despite uneven global growth, said Dasani. Welekar from Axis Securities also noted that the supply side for both precious metals and base metals like copper and aluminum is constrained, while demand remains strong. "The demand for silver and base metals is largely driven by the ongoing needs of electric vehicles (EVs), renewable energy, and advancements in artificial intelligence (AI)," he added.

Softer US dollar: Another important tailwind has been the softer US dollar. "With markets pricing in a gradual easing cycle in the US, the dollar index has eased from recent highs, supporting dollar-denominated commodities. Lower real yields have also improved the relative attractiveness of metals. On the supply side, mining disruptions, higher energy costs and stricter environmental norms have constrained fresh capacity additions, particularly in refined metals, just as demand from energy transition themes such as electric vehicles, power transmission and renewable infrastructure remains steady," said Dasani.

Rally in commodity prices: The earlier rally in gold, silver, and copper reflects a tightening physical supply environment rather than just paper-market enthusiasm, said Charmi Shah, Business Head at Wealth1. "Silver and copper have been running structural deficits for years. In silver, demand from solar, electronics, and EV supply chains has consistently outpaced mine supply, while inventories across major exchanges remain thin. Copper, central to electrification and energy transition themes, continues to face underinvestment in new mines, long gestation periods, and declining ore grades. These constraints are now becoming visible in pricing," she said.

Gold's strength, meanwhile, is being reinforced by aggressive central bank accumulation across emerging markets, particularly as countries seek diversification away from fiat currencies and sovereign debt, Shah said, adding that China’s buying interest across gold, silver, and industrial metals has further amplified the rally, especially at a time when global supply chains remain fragile.

Top metal losers today:

Hindustan Zinc shares emerged as the top losers on the index, falling as much as 3 percent to close at Rs 618.15 apiece. NMDC and National Aluminium (NALCO) shares fell nearly 2 percent each.

Vedanta and Adani Enterprises shares fell more than 1 percent each, while Hindalco Industries, JSW Steel and APL Apollo Tubes shares fell up to 1 percent.

Bucking the trend, Hindustan Copper shares closed nearly 3 percent higher. Earlier during the day, the stock jumped around 15 percent to hit a fresh 52-week high of Rs 545.95 apiece. This came as copper prices corrected sharply after hitting new all-time high levels.

Welspun Corp and Tata Steel gained around 2 percent, while Jindal Steel & Power and Jindal Stainless Steel shares closed in the green with marginal gains.

What lies ahead?

Looking ahead, momentum in metal stocks could sustain, though volatility cannot be ruled out, said Dasani. Global steel demand is projected to grow only modestly through 2030, but ex-China consumption and infrastructure spending in emerging markets should still underpin a gradual uptrend in volumes. In India, government capex and housing demand remain key tailwinds for steel makers, the analyst added.

Siddharth Maurya, Founder & Managing Director at Vibhavangal Anukulakara said that metals are still vulnerable to changes in global demand, currency fluctuations and rate expectations. Hence the rise can go on, but there will be bouts of volatility and occasional pullbacks as markets digest macro data and look for global growth drivers, according to the analyst.

For the near term, the trade looks supported as long as the dollar stays soft and the Fed leans dovish, but any abrupt US data surprise or fresh concerns around China’s exports could trigger sharp corrections, Dasani noted, adding that for investors, this is a classic cyclical rally: focus on balance-sheet strength and cost-efficient producers rather than chasing every spike.

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