Hindustan Zinc, NALCO To Vedanta Drag Nifty Metal Down 2.5%: What Triggered The Sell-Off?

Metal Stocks Fall: Metal stocks came under heavy selling pressure in Thursday’s session (January 8), with the Nifty Metal index tumbling as much as 2.5 per cent to 11,231.15 on the National Stock Exchange (NSE).

At the time of writing, all 15 constituents of the Nifty Metal pack were trading in the red. Hindustan Zinc was the worst performer, sliding nearly 5 per cent to Rs 599.25, its lowest level since August 2024.

National Aluminium Company (NALCO) and Hindustan Copper declined 4.3 per cent and 4.7 per cent, respectively, while Vedanta fell more than 3 per cent.

The weakness in metal stocks mirrored a sharp decline in base metal and silver prices, as the revenues, margins and cash flows of these companies are closely linked to global commodity

trends.

Copper and nickel prices dropped over 2 per cent as investors booked profits, extending their retreat from recent record highs. Among other Shanghai Futures Exchange base metals, aluminium fell 1.99 per cent, zinc slipped 1.40 per cent, lead declined 1.75 per cent and tin lost 1.53 per cent, according to Reuters data.

Steel stocks also featured among the top losers, with Jindal Steel, SAIL and JSW Steel trading lower. Tata Steel declined the least among the Nifty Metal constituents.

What’s behind the fall in metal stocks?

Analysts largely attributed the sell-off to stretched valuations and profit booking.

Harshal Dasani, Business Head at INVAsset PMS, said the recent softness in metal stocks should primarily be seen as profit booking linked to cooling sentiment in paper markets, rather than a deterioration in the underlying commodity cycle.

He added that short-term unwinding is natural, especially ahead of weekends and after sharp commodity moves. “Commodity cycles rarely move in straight lines; they tend to rise sharply, pause briefly, and then resume—often with corrections that get bought back quickly,” Dasani said.

The Nifty Metal index had been among the best-performing sectoral indices on Dalal Street last year, rising over 20 per cent.

Meanwhile, G. Chokkalingam, Founder, MD and Head of Research at Equinomics Research, told Mint that stretched valuations remain the key reason behind the slump. He noted that historically, metal stocks tend to correct after hitting two-to-three-year highs following a strong rally, as global capacities begin to improve.

On valuations, Chokkalingam said that even if zinc and copper companies were to triple their profits over the next two years, their price-to-earnings ratios would still remain elevated at over 20–25 times. Traditionally, industrial metals have traded at around 10–12 times earnings. Currently, even on a one-year forward basis, metals like copper are trading at more than 20–30 times P/E.

“So, it is basically a function of the rally and stretched valuations,” Chokkalingam said.

He also pointed to renewed tariff concerns from US President Donald Trump on Russia, China and India, which could weigh on global growth.

Republican Senator Lindsey Graham said on Wednesday that Trump has approved moving ahead with a bipartisan sanctions bill targeting countries that continue doing business with Russia.

“This bill will allow President Trump to punish those countries who buy cheap Russian oil, fueling Putin’s war machine,” Graham said, citing China, India and Brazil as potential targets.