The shares of metal and real estate companies surged on September 2, buoyed by multiple factors. The sharp rise in the share prices pushed the two sectoral indices into the green, leading gains on the market today.
The Nifty Metal index rose 1.3 percent to hover around 9,426, and the Nifty Realty index gained 1.33 percent to 891.50, as seen at 12.10 pm. Here are 5 possible triggers for the sharp rise in the stocks:
US Fed rate cut hopes:
Federal Reserve Chair Jerome Powell on August 22 said that the weak job market may soon force the American central bank to cut interest rates. "Downside risks to employment are rising," according to Powell's remarks at the Jackson Hole Economic Policy Symposium.
Most investors now expect a 25-basis-point Fed rate cut during its upcoming meeting which is scheduled between September 16 and September 17. 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 real estate and metal stocks. Additionally, investors expect the RBI to follow Fed in the pursuit of a rate cut, if any. This too can positively impact the stocks.
GST reforms:
The GST Council, chaired by Finance Minister Nirmala Sitharaman, is slated to meet in New Delhi on September 3-4 to deliberate on the Centre's proposal for a simplified two-rate structure of 5 percent and 18 percent. According to market experts, this simplicity in the tax structure will reduce the cost of developers and benefit homebuyers.
Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd said that housing sector stands to benefit from these reforms, as moving to a two-slab structure will not only make GST compliance easier for real estate developers, but also help rationalise input costs, improve cash flows and eventually reduce the cost of homes for buyers.
Strong Q1 GDP numbers:
Indian economy grew 7.8 percent in the April-June quarter of the ongoing financial year. This is the highest growth recorded in five consecutive quarters, beating economists' estimates. Gross domestic product (GDP) topped both the RBI's 6.5 percent projection and the 6.6 percent median recorded in a Moneycontrol poll. The GDP growth was also stronger than the 7.4 percent rate recorded in the preceding three months (Q4 FY25) and 6.5 percent recorded a year earlier (Q1 FY25).
The strong GDP numbers may have spurred confidence in Indian economy's growth, which in turn boosted the real estate and metal stocks.
Weak dollar:
The US dollar is hovering near a multi-month low. Trump's appointments to the Fed are likely to further weigh on the dollar, according to DBS. "Already, the labour market is softening, and Chair Powell has signalled the possibility of rate cuts at Jackson Hole," the analysts wrote. "This means that the overvalued USD could ease again as markets anticipate coming Fed rate cuts."
A weaker dollar improves global demand for commodities, like metals, which in turn benefits Indian metal companies through higher export opportunities and better pricing.
China aims to cut steel output:
China aims to cut steel production between 2025 and 2026, according to an official document reviewed by Reuters. The country's move aims to tackle overcapacity that has hit prices significantly.
Reduced steel output from China will reduce dumping of cheap metals into the Indian market, which in turn will benefit the Indian metal companies.
On the metal index, National Aluminium Company (NALCO) shares gained nearly 5 percent to emerge as the top gainer. NMDC shares followed, rising nearly 4 percent. Hindustan Copper, Steel Authority of India (SAIL), Tata Steel, APL Apollo Tubes, Hindustan Zinc and JSW Steel shares gained up to 3 percent.
On the real estate index, Phoenix Mills shares gained 3.5 percent to trade at Rs 1,570 apiece and emerge as the top gainer. Anant Raj and DLF shares jumped up to 3 percent. Godrej Properties, Oberoi Realty and Raymond shares gained nearly 2 percent each.
"Real estate and metal stocks have emerged as notable gainers after facing pressure in earlier months. The combination of infrastructure-led demand growth, record commercial real estate performance, and favourable GST rate cut expectation is presently leading both sectors outperformance," said Puneet Singhania, Director at Master Trust Group.
GST reforms and rate cuts together can spur growth by lowering compliance costs, improving efficiency, and boosting affordability, said Pranay Aggarwal, Director and CEO of Stoxkart. "Reduced GST on housing or construction inputs supports real estate demand, while cheaper financing from rate cuts aids both homebuyers and capital-intensive industries like metals. These measures enhance investment, stimulate domestic demand, and strengthen overall market sentiment," he added.
India’s real estate sector is in a structural upcycle, with housing sales in the top seven cities crossing 180,000 units in H1 2025, the highest in 15 years, said Jickson Sajee Research Analyst, INVasset PMS. "With private equity inflows exceeding $3.5 billion in H1, the sector is attracting capital, while large, disciplined developers are consolidating market share," Sajee added.
Indian metal firms are countering through integration, efficiency, and green steel investments, keeping medium-term prospects strong despite near-term volatility, Sajee further said.
Also read: Our LIVE blog on stock market updates
(With inputs from Reuters)
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