GMDC shares surge nearly 50% in a month; here is what is fuelling rally in the PSU stock

The stock in the last one month has surged nearly 50%, outperforming the benchmark and broader market indices, data from the exchange showed.

On the NSE, trading volume in GMDC shares spiked by 5.3 times to 3.72 crore shares compared with an average trading volume of 70.73 lakh shares. On the BSE, as many as 31.1 lakh shares changed hands as against an average of 10.73 lakh shares traded daily in the past two weeks.

Why are GMDC shares rallying?

GMDC shares came on investors' radar last month after China lifted restrictions on the export of rare earth magnets to India. Last week alone, shares of GMDC rose 26%, while in the last two trading sessions, the stock has surged 20%.

Meanwhile, the government's renewed focus on rare earth minerals also led to a boost in GMDC shares. The government is in talks with Peru for critical mineral supplies, and for the first time, a separate chapter on rare earths has been included in the ongoing negotiations of a Free Trade Agreement (FTA), CNBC TV18 reported.

The second round for these negotiations took place last month, and the next set of talks is slated for October, the report added.

Chinese Foreign Minister Wang Yi last month assured External Affairs Minister S Jaishankar that Beijing will resume supplies of fertilisers, rare earth minerals and tunnel boring machines (TBM), reported The Hindustan Times on Tuesday, easing concerns for Indian manufacturers hit by shortages.

China, which processes over 90% of global rare earth minerals (REMs), introduced export licence requirements in April for seven rare earth elements and magnets, tightening global supply chains. India, which imports more than 70% of its REMs from China, has faced mounting disruptions.

Rare earth minerals, including neodymium, dysprosium and terbium, are critical for EV motors, smartphones, missile systems and high-performance automotive components.

Earlier reports suggested that GMDC was keen to establish a rare earth elements (REE) processing plant in Gujarat.

India is looking at transitioning to green energy across various verticals, and it is here that GMDC is looking at conducting a scoping study to determine the economic viability of the project and outline at least one opportunity to develop the processing plant for the deposit at Ambadongar, Chotaudepur District, in Gujarat state in India.

As of 2:26 pm, GMDC shares traded 12.84% higher at ₹638, outperforming the NIFTY Smallcap 250 index, which was down 0.33%.