Metal stocks rise for second day; Hind Copper, NALCO rise up to 3%: Here are four reasons behind rally

The shares of metal companies rose in trade on December 1, as soaring commodity prices, rising expectations of a rate cut by the US Federal Reserve and strong manufacturing data boosted investor sentiment. The rise in the metal stocks pushed the Nifty Metal index up nearly 1 percent in the morning trading hours.

The index rose to 10,374.30 on Monday, as seen at 10.26 am, extending gains for the second consecutive session.

Strong manufacturing growth in Q2:

Manufacturing output rose 9.1 percent during the July-September quarter of the ongoing financial year 2026 (Q2 FY26), according to the latest official data. This marks a sharp rise from the 7.7 percent growth recorded in the preceding quarter (Q1 FY26), and 7.6 percent in the year-ago period (Q2 FY25).

The strong manufacturing data may have also boosted investor sentiment.

Soaring copper prices:

Copper prices soared to fresh record highs globally amid supply concerns. Top Chinese smelters agreed to a plan to cut output in 2026 and on record-high premium offers by Codelco, the world's biggest copper producing company.

Copper prices on the London Metal Exchange (LME) set a new all-time high of more than $11,290 per ton. Comex futures in the US also rose nearly 2 percent.

On the domestic front too, copper futures soared to lifetime highs. Copper futures on the Multi Commodity Exchange of India (MCX) with December expiry rose more than 1 percent to hit a lifetime high of Rs 1,048 per kilogram.

The sharp rise in the copper prices pushed the shares of Hindustan Copper nearly 4 percent higher to trade at around Rs 339 apiece.

Silver prices jump:

Silver prices accompanied the red metal, rising to fresh record highs. Silver futures with March expiry on MCX rose nearly 2 percent to hit a lifetime high of nearly Rs 1.79 lakh crore per kilogram.

"Industrial demand for electronics and renewables remains strong while silver also benefits from safe-haven sentiment that’s impacting gold. Silver can also attract flows from investors who are looking to take advantage of Silver’s higher reward potential," said Ross Maxwell, Global Strategy Lead at VT Markets.

Following the sharp rise in silver prices, Hindustan Zinc shares rose more than 2 percent to trade at Rs 497 apiece. Notably, Hindustan Zinc is the largest producer of silver in India, and produces refined silver with a minimum 99.9 percent purity.

Fed rate cut hopes:

Despite initial expectations of a no rate cut, a higher probability of a December rate cut by the US Federal Reserve has been boosting global markets. Fed Governor Christopher Waller last week said that the American job market is weak enough to warrant another quarter-point rate cut in December.

Earlier, New York Fed President John Williams, a permanent voter on rate policy and vice chair of the rate-setting Federal Open Market Committee, said that interest rates can fall "in the near term".

"I view monetary policy as being modestly restrictive...Therefore, I still see room for a further adjustment in the near term to the target range for the federal funds rate to move the stance of policy closer to the range of neutral," Williams said.

Traders now see an 87 percent chance of a rate cut in December, up from 50 percent last week, Reuters reported. A rate cut in the US could reduce borrowing costs for foreign investors, encouraging them to invest in higher growth markets in India. This boosts metal stocks.

Other metal gainers today:

While Hindustan Copper and Hindustan Zinc led gains on the metal index, National Aluminium Company (NALCO) shares followed, rising more than 2 percent. Vedanta shares meanwhile gained around 2 percent.

Steel Authority of India (SAIL), APL Apollo Tubes, Adani Enterprises and JSW Steel shares rose around 1 percent each, while Hindalco Industries, Tata Steel and Welspun Corporation shares were up nearly 0.5 percent.

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(With inputs from Reuters)

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