Election Results 2024: Metal Index crashes 10%: NALCO, SAIL, NMDC Hindustan Copper share price dip up to 19%

Election Results 2024: Nifty Metal Index Crashes Over 10% During Intraday Trading on Tuesday

The Nifty Metal index experienced a significant crash, plunging more than 10% during intraday trading on Tuesday. Shares of key companies such as National Aluminium Company (NALCO), Steel Authority of India Ltd (SAIL), NMDC, and Hindustan Copper saw a sharp decline, falling between 15% and 19%, which contributed to the overall drop in the index.

These public sector undertakings led the decline in the Nifty Metal index. Investor confidence in NALCO, SAIL, NMDC, and Hindustan Copper, which had remained high, was adversely affected by the early trends in the Lok Sabha 2024 elections. The ruling Bhartiya Janta Party-led National Democratic Alliance did not receive the expected mandate, leading to a dip in investor sentiment.

Other metal companies, including Tata Steel, Jindal Steel and Power, JSW Steel, Hindalco Industries, Vedanta Ltd, and Hindustan Zinc Ltd, also experienced significant declines in their share prices, falling between 6% and 9%, closely following the trend set by the public sector companies.

Despite strong confidence in the country's steel demand driven by government-led infrastructure spending, the unexpected outcome of the Lok Sabha election results has hurt investor sentiment, noted an analyst at a domestic brokerage.

APL Apollo Limited's share price also corrected by more than 5%. While analysts remain optimistic about metal stocks, they advise caution due to the volatility in the equity market until the government formation is complete. Another critical factor to monitor is the demand from China, which is expected to remain strong. As the largest producer and consumer of commodities, stronger demand from China could push up international steel prices, benefiting companies like Tata Steel, Jindal Steel and Power, JSW Steel, SAIL, and even NMDC.

Base metals such as aluminium, copper, and zinc have seen substantial price increases on the London Metal Exchange, which is positive for Hindalco Industries, Vedanta Ltd, Hindustan Zinc Ltd, and NALCO. Aluminium prices, which were around $2,100 per tonne in January, have risen to approximately $2,600 per tonne. Copper prices, which were around $8,000 per tonne in February, have exceeded $10,000 per tonne. Zinc prices have also risen from below $2,300 per tonne in February to over $2,900 per tonne. This trend is favorable for Hindalco Industries, Vedanta Ltd, Hindustan Zinc Ltd, and NALCO.

Notably, Satish Pai, Managing Director of Hindalco Industries, and Anil Agarwal, founder and Chairman of the Vedanta Group, have recently expressed their expectation that aluminium demand will remain strong in the country.