Metal Stocks Dive on Price Drop
Metal stocks in India experienced a dramatic decline on January 30, with major companies facing significant selling pressure. The sharp correction in prices for gold, silver, and other base metals led to a drop in shares for firms like Hindustan Zinc, Vedanta, and NALCO. Hindustan Copper saw a staggering 10.5% plunge, while NALCO and Hindustan Zinc dropped 9.4% and 7.3%, respectively. This trend reflected a broader bearish sentiment in the sector.
The Nifty Metal index, which tracks the performance of metal stocks, fell over 4%, making it the largest loser on the National Stock Exchange (NSE). In contrast, the benchmark Nifty 50 index only saw a decline of half a percent. Other notable stocks, such as Hindalco and NMDC, also faced losses, indicating a widespread downturn across the industry.
The sell-off was largely attributed to a significant drop in precious metal prices. Silver, for instance, tumbled 6% on the same day due to a strengthening US dollar, despite it being on track for a historic monthly performance. On the Multi Commodity Exchange (MCX), silver prices dropped to ₹3,75,900 per kg, down nearly 10% from recent highs. Similarly, gold futures saw a heavy decline, crashing by over ₹10,000 or 6% to ₹1,59,250 per 10 grams.
The dollar index's rise, following a political agreement in the US, added pressure on metal prices. Furthermore, the Federal Reserve's decision to maintain interest rates contributed to this situation, impacting the market sentiment negatively. Even though Vedanta reported a 60% year-on-year increase in net profit, investor confidence waned amid the fluctuating commodity prices.
In the aftermath of these developments, Vedanta's offer-for-sale (OFS) for Hindustan Zinc attracted significant interest, indicating that while the market faces challenges, potential investment opportunities still exist. The company plans to sell up to 3.35 crore shares as part of its OFS, priced at a floor rate of ₹685 per share, which reflects still-existing investor interest despite the downturn.
