Hindustan Zinc shares jump nearly 6%; key triggers driving the stock higher

Shares of Hindustan Zinc, a Vedanta Group firm, were on investors' buying list on Wednesday, August 26. The stock advanced as much as 6.64% to hit a high of ₹632 on the NSE.

Shares were witnessing strong buying interest amid higher zinc prices.

Zinc prices on Wednesday rose by 0.85% to ₹414.80 per kg in futures trade due to higher bets by market participants.

On the Multi Commodity Exchange (MCX), zinc contracts for September delivery edged up by ₹3.50, or 0.85%, to ₹414.80 per kg with a business turnover of 990 lots.

Traders attributed the rise in zinc futures to higher demand in the spot market.

Zinc outlook

Zinc is one of the most strategically important non-ferrous metals supporting modern infrastructure, transportation, engineering, renewable energy, electronics, construction, and manufacturing industries worldwide.

According to a recent article by Lohaa (operating primarily via Lohaa), a digital B2B marketplace and business network based in India, owing to its excellent corrosion resistance, superior casting characteristics, recyclability, and long service life, zinc has become indispensable for galvanising steel, producing die-cast components, manufacturing brass alloys, batteries, chemicals, and precision engineering products.

The article adds that between 2025 and 2030, both primary zinc production and secondary recycling are expected to witness sustained growth globally.

Besides, silver prices also rose in the trade. Silver prices rose 0.53% to ₹2.45 lakh per kg in the futures trade on Wednesday amid a firm global trend.

On the MCX, the white metal for September delivery increased by ₹1,284, or 0.53%, to ₹2,45,411 per kilogram in a business turnover of 1,093 lots.

Silver and zinc connection

Silver and zinc are closely linked for Hindustan Zinc because silver is produced as a by-product of its zinc-lead mining operations.

This means higher silver prices can boost the company’s revenue and margins without a proportionate increase in production costs.

At the same time, stronger zinc prices directly improve earnings, making a simultaneous rise in both metals particularly positive for Hindustan Zinc.

Other factors to know

Shares rallied after the government clarified that it was not looking to sell its stake in the company at present, easing concerns over a potential offer for sale (OFS).

Adding to the positive sentiment was a positive view from Jefferies, which raised its target price for the stock, citing stronger zinc and silver prices.