Metal stocks faced intense selling pressure on Friday, January 30, as a sharp correction in gold, silver, and other base metals rattled investor sentiment. This marked the second consecutive session of losses for the sector, with major players like Hindustan Zinc Limited, Vedanta Limited, Hindustan Copper Limited, and National Aluminium Company Limited witnessing steep declines.
Steep Declines in Key Metal Stocks
Shares of Hindustan Copper plummeted more than 19% to an intraday low of ₹554.65, reflecting the severe impact of weakening commodity prices. Hindustan Zinc dropped 13% to ₹546.25, while NALCO slid nearly 12% to ₹339.75. Vedanta also declined 10% to ₹614.45 during the session, underscoring the broad-based nature of the selloff.
Nifty Metal Index Emerges as Worst Performer
The Nifty Metal index fell over 5%, emerging as the worst-performing sectoral index on the National Stock Exchange. Over two trading sessions, the index has corrected by more than 10%, highlighting the sustained pressure on metal stocks. Broader markets were also hit following the Union Budget announcements, with the BSE Sensex dropping more than 2,800 points from the day’s high and the Nifty 50 slipping to 24,571.75.
Budget Announcements Add to Market Woes
Finance Minister Nirmala Sitharaman announced an increase in Securities Transaction Tax on derivatives, which further dampened market sentiment. STT on futures was raised to 0.05% from 0.02%, while STT on options transactions was increased to 0.15% from 0.01% earlier. Markets later recovered part of the losses and were trading around 1% lower at about 2 pm, but the initial shock contributed to the day’s volatility.
Gold and Silver Prices Hit Lower Circuits
Gold and silver prices extended their steep fall on Sunday, February 1, hitting the 9% lower circuit as investors rushed to book profits amid a global selloff triggered by a stronger US dollar. Sentiment was further dented after reports suggested that CME Group was increasing margins on Comex gold and silver futures. Traders also remained cautious ahead of the Union Budget 2026.
On MCX, silver prices dropped 9% to the lower circuit at ₹2,65,652 per kg, while MCX gold prices also hit their 9% lower circuit at ₹1,36,185 per 10 grams. The selloff had accelerated on Friday, January 30, with silver prices plunging 19% to ₹3.12 lakh per kg and gold falling to ₹1.65 lakh per 10 grams. This came immediately after silver had touched a record high of ₹4,04,500 per kg on Thursday, before witnessing a sharp collapse the next day.
Global Factors Driving the Meltdown
Commodity markets globally have remained volatile since US President Donald Trump nominated Kevin Warsh as the new Federal Reserve Chair. Market participants believe his leadership could strengthen the US dollar, reducing the appeal of safe-haven assets like gold and silver. Although Warsh’s stance had appeared to soften in recent months, aligning with calls for lower interest rates, analysts believe he may revert to a stricter policy approach if inflationary pressures return.
CME Group Raises Margins Amid Volatility
Bloomberg also reported that CME Group was raising margins on Comex gold and silver futures following the steepest price declines in decades. Gold margins are set to increase to 8% from 6% for non-heightened risk profiles, and to 8.8% from 6.6% for heightened risk profiles. Silver margins will rise to 15% from 11% for non-heightened risk profiles, while heightened risk profile margins will be raised to 16.5% from 12.1%. Margins on platinum and palladium futures are also set to be increased, adding to the overall market uncertainty.
The combination of domestic policy changes and global economic shifts has created a perfect storm for metal stocks and precious metals, leading to significant corrections and heightened investor caution in the short term.
