Metal stocks saw sharp declines on February 3, with Vedanta, NALCO, and NMDC among the worst hit, falling by nearly 6 percent. The downturn followed a spike in the dollar index and a slump in base metal prices on the London Metal Exchange (LME).
The Nifty Metal index fell over 3 percent as shares of Tata Steel, Jindal Stainless, Hind Copper, Hindalco, and SAIL dropped between 3-5 percent.
Key Reasons Behind the Drop:
- Global Trade War Fears: President Trump’s announcement of tariffs on key trading partners triggered fears of a potential global trade war. China, Canada, and Mexico were the primary targets, with 25 percent tariffs imposed on Canadian and Mexican imports and 10 percent on Chinese imports.
- Impact of China:
China, the largest importer of metals globally, plays a crucial role in determining demand and prices for base metals. Any economic slowdown in China due to trade tensions could significantly impact Indian metal companies reliant on global market trends. - LME Metal Prices Drop:
A fall in base metal prices on the LME contributed to the weakness, exacerbating losses for domestic players.
Stock Performance:
| Stock | % Change on NSE |
|---|---|
| Vedanta | -6.0% |
| NALCO | -3.9% |
| NMDC | -3.8% |
| Tata Steel | -2.3% |
| Jindal Stainless | -2.7% |
| Hindalco | -2.2% |
| SAIL | -3.9% |
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