Vedanta to Hindustan Zinc: Metal stocks shine amid high commodity prices; can they sustain their momentum?

Metal stocks like Vedanta, Hindustan Zinc, Hindustan Copper, National Aluminium, among others have rallied over the last one-month period as global commodity prices surge amid supply disruption, falling inventories and higher demand amid the West Asia conflict.

NSE data showed that the sectoral benchmark index, Nifty Metal, has delivered more than 4% returns in the last one-month period, outperforming the broader market indices.

After the trading session on Friday, August 21, Nifty Metal ended 0.86% higher at 13,172.60 points, compared to ₹13,060.25 points at the previous market close, according to the exchange data.

After healthy Q1 performance, experts predict that in the upcoming period, key focus will remain on commodity prices, supply disruptions, input cost trajectory, and any changes in anti-dumping norms, among other near-term pressures.

Commodity price impact

The rally in key metal prices like that of Steel, Copper, Aluminium, Zinc, among others resulted in the benchmark Nifty Metal index gaining major support and momentum as the underlying companies enjoy direct margin benefit by selling their production at an elevated rate.

This also, in turn, aids the overall revenue growth in a particular period, similar to what was seen in the Q1 earnings for FY27.

Several metal and mining companies, including Tata Steel, SAIL, Vedanta Aluminium and Hindustan Zinc, among others, recorded healthy profit growth due to the higher prices in the market.

On Friday, global copper prices surged more than 2%, while the commodity has gained nearly 5% in the last three months and almost 1% in the past one-month period, according to Investing.com data.

Similar to copper, Aluminium prices in London were trading more than 1.4% higher on August 21, and the data further showed a 2% gain in prices in the last one-month period.

Other key metals like Steel gained 1.4% in the last one month, and Zinc prices rallied 7.3% in the same period, as per the exchange data.

Metal stocks in focus

What’s the outlook for metal stocks?

Looking ahead, Saikat Kumar, Partner & Board Member of Red Lions Capital DIPMarket, said that metal and mining companies have entered FY2026-27 with improved fundamentals and a strong recovery from the previous quarter; however, concerns remain over the near-term pressures in the market.

“India’s metals and mining sector is entering FY27 with improving fundamentals after a strong recovery in Q4 FY26. However, near-term pressures remain,” Saikat Kumar told Upstox.

The expert also explained that investors should watch out for anti-dumping rulings on imports into India and the durability of the aluminium supply disruption.

In line with the constructive outlook, Harshal Dasani, Business Head of INVAsset PMS, said that the key focus will also remain on the input cost trajectory, aluminium price sustainability, China’s production and export behaviour, and domestic demand from the infrastructure push.

“This is a sector where price is currently leading the earnings, so track volumes and margins rather than headline revenue growth,” said Harshal Dasani.

With companies enjoying margin benefits from higher commodity prices in the global market, any pullback to the same can, in turn, impact margins at a time when margins remain a concern due to higher input costs.

Nifty Metal outperforms NIFTY50

The sectoral benchmark Nifty Metal outperformed the benchmark NIFTY50 index in the last one-month period as global supply chain disruption, falling inventory, and rising demand fuel commodity metal prices in the global market.

NSE data showed that Nifty Metal has risen 4.3% in the last one-month period, while NIFTY50 was trading 0.2% higher in the same period as of the stock market session on Friday, August 21.

“Steel safeguard duty extended to April 2028 lifted domestic HRC prices 14% QoQ in Q4 FY26, with spot prices running ₹3,000-5,000/tonne higher into Q1; and LME aluminium hit four-year highs ($3,700/t) on Middle East supply disruption — a naval blockade sidelining ~9% of global supply, ALBA (Bahrain) suspended, EGA refining offline ~12 months,” said Saikat Kumar highlighting the two factors powering the momentum.

In the last one week, the Nifty Metal index has gained 1.7%, while the broader NIFTY50 was down 0.5% amid elevated crude oil prices and geopolitical risk due to the re-escalating West Asia crisis.

In the longer term, Nifty Metal has delivered more than 146% returns to investors in the last five years, over 100% gains in the last three years, and more than 38% returns in the past one-year period.