Vedanta, SAIL, HZL: Metal stocks shine; NIFTY METAL up 16% in 1 month: Key factors behind the rally

Metal stocks have been performing well over the past few sessions. Data show that the NIFTY METAL index has rallied 16% in one month.

At the time of writing this article, Vedanta was trading over 0.6% higher at ₹725.35 on the NSE, while SAIL was trading nearly 3% higher. Hindustan Zinc was also trading over 2.3% higher.

Why metal stocks are dazzling

The sharp rally in metal stocks is being driven by a combination of factors such as firm commodity prices and a bullish stance by leading analysts.

Besides, strong quarterly numbers by companies such as Hindustan Zinc (HZL) also boosted the sentiment. Additionally, rising prices of base metals like aluminium, zinc, and copper amid supply constraints and expectations of demand recovery, particularly from China, have also been a key factor.

A weaker dollar has also aided commodity prices, making metals more attractive globally.

In addition, analysts note that expectations of infrastructure spending and industrial demand in key economies have further boosted the outlook.

Analysts have turned constructive on the sector, citing favourable macros, improving profitability, and attractive valuations, which have collectively led to strong buying interest in metal stocks.

Mining conglomerate Vedanta's demerger and listing of separate metal companies is also one of the key interests for market participants.

What leading analysts have said in their latest notes

Goldman Sachs has initiated coverage on the steel sector with a positive stance, highlighting a shift “from cyclical to structural” growth.

The financial services firm expects domestic steel demand to double by FY32, led by infrastructure spending, automobile demand, and the energy transition. It noted that India could play a role similar to China during 2005–2020 in driving incremental global steel consumption.

With per capita steel consumption at 102 kg, well below the global average of 215 kg, Goldman Sachs sees a long runway for growth, supporting valuations and returns over the long term.

Jefferies

Jefferies highlighted improving global dynamics, noting that China’s steel exports have declined 9% YoY in Q1 CY25, alongside a 6% drop in production, which is helping rebalance markets.

The financial services company said Asian conversion spreads are recovering from near 15-year lows, with significant room for expansion if Chinese exports continue to ease.

Jefferies expects FY27–28 earnings for JSW Steel and Tata Steel to be 5–28% above Street estimates.

HSBC on Hindalco Industries

HSBC expects positive developments around Novelis in CY26, particularly at key projects like Oswego and Bay Minette, which could improve earnings visibility. It also noted that Hindalco has underperformed its peers, leaving room for catch-up.

HSBC sees potential for earnings upgrades, with a bull-case valuation of ₹1,670 supported by higher LME prices, stronger Novelis performance, and multiple expansion.