Metal stocks rise 7%, analysts see potential upside of up to 25%

Synopsis

Metal stocks surged over 7% on Wednesday, driven by firm base metal prices and reduced uncertainty over US tariffs. Analysts suggest buying on dips, anticipating up to 25% upside. Companies like Lloyds Metals, National Aluminium, and Vedanta saw significant gains as investors shifted funds from IT to the buoyant metal sector.

Mumbai: Metal stocks rallied more than 7% Wednesday as base metal prices firmed up and uncertainty over the applicability of US tariffs supported buying momentum. Analysts said investors can buy on dips as there is scope for further upside of up to 25% in the near term.

Lloyds Metals and Energy jumped 7.5% after Nomura initiated coverage on the stock with a 'Buy' rating. National Aluminium Company and Vedanta gained around 4.5% each. Hindustan Copper and Hindustan Zinc rose 4% and 3.6%, respectively.

"The uncertainty on the tariffs by the US, weakening of the dollar and the uptick in base metal prices like silver, copper and zinc, along with steel, led to the buying momentum in metal stocks," said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.

Trivedi said investors reallocated funds from the IT pack to metal stocks since the latter has remained buoyant.

The Nifty Metal Index gained 2.7% while benchmark Nifty advanced 0.2% on Wednesday. All 15 stocks in the metals index ended higher.

Among base metals, silver climbed 4% to $90.6 on Wednesday while gold and copper rose around half a per cent each. Steel advanced 1.3%.

Agencies

investors can buy on dips, say analysts

The recent implementation of safeguard duties on steel imports has successfully held back Chinese dumping, providing a much-needed boost to ferrous stocks such as Lloyds Metals, Vedanta, SAIL, and Tata Steel, said Om Ghawalkar, market analyst, Share.Market.

“The overall sentiment for the sector remains positive, with a projected 15-20% rally supported by strong domestic steel demand and “green steel” policies introduced in Budget 2026,” said Ghawalkar.

In the last one month, the Nifty Metal Index jumped 8% while benchmark Nifty rose 1.7% in the same period. So far this year, the Nifty Metal Index surged 11% while benchmark Nifty fell 2.5%.

“Any fall in metal stocks is a buying opportunity and there is room for upside of 15- 25% in the near-term,” said Trivedi. Trivedi said Tata Steel, Nalco and SAIL are the top picks in the sector and are trading at reasonable valuations.

“JSW Steel and Hindalco are also expected to see stable performance,” he said. Technical indicators suggest a potential 20% upside with a long-term target of 15,000 as the metals index is currently breaking out of an ascending triangle pattern.

“If the index sustains levels above 12,400, it is likely to target 13,000, driven by robust infrastructure spending and the growing demand for Electric Vehicles (EVs),” said Ghawalkar. The strength is further confirmed by a MACD golden crossover, signalling that the current uptrend has significant staying power, he said.

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