Metal Stocks Rally as Earnings Outlook Boosts Copper, Zinc, Steel
Overview
Indian metal shares surged, led by Hindustan Copper and Hindustan Zinc, on expectations of robust Q3FY26 earnings. A rebound in aluminium, zinc, and copper prices, alongside a 12% safeguard duty on steel imports, bolsters sector sentiment despite rising coking coal costs. Analysts predict margin improvement for steelmakers in Q4.
Stocks Mentioned
Metal Sector Rebounds on Earnings Hopes
Indian metal stocks experienced a significant uptick on Monday, with the Nifty Metal index climbing 1.5% to 11,265.50. This surge was driven by positive expectations for third-quarter fiscal year 2026 earnings, signaling renewed investor confidence in the sector.
Hindustan Copper and Hindustan Zinc (HZL) led the advance, both rallying approximately 4% in intra-day trading. Vedanta also saw substantial gains, up 3%. Other key players like Hindalco Industries, Tata Steel, Steel Authority of India (SAIL), Jindal Steel, and JSW Steel posted gains between 1% and 2%, contributing to the broad-based sector strength.
Driving Factors: Prices and Duties
Improvements in aluminium, zinc, and copper realizations, up 8%, 12%, and 13% respectively quarter-on-quarter, supported non-ferrous players. This performance is expected to outshine ferrous players, according to ICICI Securities. The Indian government's imposition of a 12% safeguard duty on steel imports in late December 2025 has significantly bolstered domestic steel prices.
Hot-rolled coil (HRC) and rebar prices have already risen 7-8% above the Q3 average. This, coupled with a 2% depreciation in the Indian Rupee, provided additional support. Analysts anticipate a sharp reversal in steel margins for Q4, especially as January to June represents peak demand season in India.
Margin Pressures and Price Hikes
Despite positive price movements, some analysts caution about headwinds. Elara Capital noted that softer steel prices and rising raw material costs could compress margins for steel companies in Q3FY26. HRC prices saw a sequential decline of ₹2,110/tonne, while Australian coking coal prices increased by 9%, intensifying cost pressures.
In response to rising coking coal costs and prior multi-year low steel prices, leading domestic steel firms announced price hikes. Increases of ₹750-1,000/tonne for HRC and CRC were implemented in late December, followed by another ₹1,000-2,000/tonne hike in early January. The 12% safeguard duty has widened the import landed cost premium over domestic HRC prices to ₹4,000–5,000/tonne, offering crucial price support.
