Metal stocks fell sharply on Thursday, 22 October, as the NIFTY METAL index slid to 11,591.25 from 11,859.55, a drop of 2.26%. All 15 constituents traded in the red, reflecting weak global cues. Brent crude had risen above $110 a barrel amid escalating Middle East tensions, raising transportation, freight and energy costs for metal producers and squeezing profit margins. The broader Indian equity market also faced pressure, contributing to the metal sector’s decline.

Over the past six months, the metal index has fallen nearly 10%, and it has shed more than 4% in the last five sessions. This decline mirrors a broader slump in base metal prices worldwide and reflects investors’ concerns about slowing global demand. The index’s performance has been further dampened by a stronger US dollar and higher bond yields, which make dollar‑priced metals more expensive for buyers using other currencies and weigh on commodity sentiment.

Key factors driving the sell‑off include rising crude oil prices, fears of weaker global demand, a stronger US dollar and higher bond yields, weakness in international base metal prices, and profit‑booking by investors amid broader market weakness. Higher oil costs increase freight and energy expenses for producers, while a stronger dollar raises the cost of dollar‑priced metals for foreign buyers. Declining or stagnant base metal prices directly impact earnings for Indian producers that rely heavily on market prices for aluminium, zinc and other metals.

Nomura has initiated coverage on Vedanta Aluminium with a positive stance, believing its cost structure is undergoing a favourable reset. The firm also started coverage on Hindalco with a bullish view, citing the company’s capitalisation on expansion projects that the market has not yet fully recognised. For NALCO, Nomura has a cautious stance, pointing to limited growth initiatives and an unfavourable earnings composition. The differentiated approach reflects Nomura’s conviction that value creation in the aluminium sector will increasingly depend on resource control and operational efficiency rather than commodity price exposure.

Aluminium prices have shed their Middle East supply‑risk premium, falling to pre‑conflict levels as stronger output from China and Indonesia, rising exports of semi‑finished aluminium products from China and the restart of European smelters eased supply concerns. Prices briefly closed below $3,000 a tonne on 14 and 15 October before recovering above that level, according to oilprice.com. However, supply risks remain due to disruptions in the Strait of Hormuz and logistical challenges, while Standard Chartered has lowered its average aluminium price forecasts for 2026 and 2027, citing improving supply prospects.

The metal sector’s slide reflects a confluence of higher oil costs, a stronger dollar, weaker global demand expectations and a pullback in base metal prices. Nomura’s mixed coverage signals differing outlooks for key aluminium producers, while aluminium prices have largely normalised after the Middle East supply shock. Investors remain cautious, trimming cyclical exposure amid broader equity weakness and profit‑booking activity. The NIFTY METAL index’s 10% six‑month decline and 4% fall over five sessions underscore the sustained pressure on Indian metal stocks.