The Nifty Metal index gained 1.7% on Thursday, and has surged as much as 10% so far in the first four days of the week, during which it has gained in three of them.
Stocks like NALCO (up 14%), JSPL (up 13%), SAIL and Jindal Stainless (up 12% each) are among the top gainers on the metals index. Een the lowest gainer on the index during this period, Hindalco Industries, a Nifty 50 constituent, is up 5.5%.
Here are some factors working in favour of metal stocks
The announcement of a provisional trade agreement between the US and China improved global risk sentiment, encouraging flows into cyclicals like metals.
Back home, positive commentary from Tata Steel on demand outlook and margin stability added to the bullish sentiment in the steel segment.
Broader markets leaned risk-on this week, benefiting commodities and industrials.
Now a key driver of the rally in aluminium-related stocks was the sharp rebound in alumina prices.
Reports suggest Guinea is considering cancelling Emirates Global Aluminium’s mining licence. EGA exported 10.8 million tonnes of bauxite in 2024, supporting ~3.5 mt of alumina production capacity.
This potential disruption has raised fears of a near-term alumina shortage, prompting pre-buying and speculative positioning.
As a result, alumina prices have surged over 10% from April lows.
Nalco stands to benefit, as it derives a portion of its earnings from alumina sales which could lift its margins in the near term.
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