Metal Stocks Face Heavy Selling Pressure Amid Commodity Price Correction
Indian metal stocks experienced a significant downturn on Friday, January 30, as a sharp correction in precious and base metal prices triggered widespread selling across the sector. Major companies including Hindustan Zinc, Vedanta, Hindustan Copper, and NALCO saw their shares plummet during the trading session, reflecting broader market weakness in commodity-linked equities.
Sharp Declines Across Key Metal Counters
The selling pressure was particularly severe for several prominent metal stocks. Hindustan Copper plunged 10.5% to reach an intraday low of ₹679.20, while NALCO dropped 9.4% to ₹388.45. Hindustan Zinc declined 7.3% to touch a day's low of ₹663.30, and Vedanta fell as much as 6.6% to ₹714.95 during intraday trade. These substantial losses highlighted the sector's vulnerability to fluctuations in global commodity markets.
Precious Metals Experience Dramatic Price Falls
The stock market sell-off followed a dramatic decline in precious metal prices. Silver prices tumbled 6% on Friday, with MCX silver slumping to ₹3,75,900 per kg after touching a record high of ₹4,20,048 per kg in the previous session on January 29. From its peak, silver has now declined nearly 10%, representing a drop of over ₹44,000.
Gold prices also faced heavy selling pressure, with MCX February gold futures crashing by more than ₹10,000, or 6%, to ₹1,59,250 per 10 grams. This substantial correction in precious metals created a ripple effect across related equity sectors.
Stronger US Dollar Exerts Pressure on Metals
The primary driver behind the metal price correction was a strengthening US dollar. The dollar index climbed nearly 0.50% after US President Donald Trump and Democrats reached an agreement late Thursday to avoid a partial government shutdown. Additionally, the US Federal Reserve's decision to maintain interest rates further supported the dollar, creating headwinds for dollar-denominated commodities like gold and silver.
Vedanta's Strong Quarterly Performance Amid Market Turmoil
Interestingly, the market downturn occurred despite Vedanta reporting robust quarterly results. The metals-to-oil conglomerate announced a 60% year-on-year rise in consolidated net profit at ₹7,807 crore for Q3FY26, compared with ₹4,876 crore in the same quarter last year. This performance was aided by firm base metal prices during the quarter.
The company's revenue for the quarter rose 19% to ₹45,899 crore, driven by higher LME prices, improved volumes, better premiums, and forex gains. Vedanta delivered its highest-ever quarterly EBITDA of ₹15,171 crore, up 34% year-on-year, supported by margin expansion of 629 basis points to 41%. The company's net debt stood at ₹60,624 crore, translating into a net debt-to-EBITDA ratio of 1.23x in Q3FY26, an improvement from 1.40x in Q3FY25.
Broader Implications for Indian Markets
The simultaneous decline in both metal stocks and precious metal prices underscores the interconnected nature of commodity markets and equity performance. While Vedanta's strong quarterly results demonstrate the sector's underlying resilience, the immediate market reaction highlights how external factors like currency movements and global economic developments can quickly overshadow company-specific fundamentals.
Investors are now closely monitoring whether this represents a temporary correction or the beginning of a more sustained downturn in metal-related assets. The coming trading sessions will reveal whether bargain hunting emerges or if the selling pressure continues to weigh on this crucial sector of the Indian economy.
