Metal stocks in focus: Check key factors aiding the rally as Nalco, NMDC rise up to 3.5% in a week

Metal stocks have been in focus this week amid reports of Chinese stimulus measures and increased mutual fund inflows. Sectoral NIFTY Metal index, which comprises leading steel makers like Tata Steel, JSW Steel, SAIL and Jindal Steel and Vedanta, has seen a roller coaster ride in the past week.

The index breached the 10,000 level and hit a high of 10,300 following pick up in its constituents.

On Wednesday, NIFTY Metal index traded around 0.5% lower due to losses in JSW Steel, Jindal Steel and Adani Enterprises. APL Apollo Tubes Ltd, Jindal Stainless and Hindalco Industries were the only gainers in afternoon trade.

According to reports, mutual fund players also picked up stocks of NMDC, Moil on expectations of gains from the China government’s proposed stimulus measures.

Mutual fund players think the metal sector will be the biggest beneficiary of the Chinese stimulus measures.

The investors and market experts are keeping a watch on the metal stocks due to following factors:

Supply-demand dynamics favourable for aluminium

According to experts, aluminium prices are expected to rule at $2,700 per tonne in FY 2025-26 against $2,400 per tonne in FY24. While growth drivers are in place to support prices in a balanced aluminium market, the sector could witness a shortfall of 500 kilo tonnes next year, according to experts.

Metal sector attracts MF funds

Despite a fall in equity fund flows in September, mutual funds became select pickers of metal shares. Tata Steel, NMDC, Nalco and Moil among top picks for mutual funds.

Chinese stimulus lights up metal stocks

China has announced a stimulus package to prop up its faltering economy. Though the neighbouring country which is a major metal consumer is yet to come out with finer details, economists believe the stimulus could be as big as 2 trillion yuan (around $420 billion) to stabilise the economy and achieve a targeted growth rate of 5%.

The announcement came as a booster for metal shares but the momentum fizzled out later due to delay by China in rolling out finer details.

Besides, reports of the government considering doubling import duty on steel from China and other countries also supported metal prices last week. Here are the top five metal stock gainers in the past week.

Top 5 NIFTY Metal gainers in a week

1. NMDC

2. National Aluminium Company (Nalco)

3. Jindal Stainless

4. Hindustan Zinc

5. Ratnamani Metals & Tubes Limited

Metal shares have been in focus in the past month on reports of Chinese stimulus measures. Amid market expectations, Nalco gained around 15%, Hindalco and Vedanta Ltd by over 7% each, APL Apollo Tubes by over 6% and NMDC by over 5% in the past 30 days.