Tata Steel, Vedanta, Jindal Steel, SAIL: Metal shares lead market rally today; here's why

Metal shares were the top gainers today due to the weakening of dollar that increased demand for commodities. In Wednesday’s intra-day trade, sector heavyweights like Tata Steel and Steel Authority of India Limited (SAIL) led the rally, with Tata Steel rose 6% to Rs 167.73, approaching its 52-week high of Rs 170.18. Nifty Metal index outperformed the broader Nifty 50 index, which rose by just 0.55%. The Nifty metal index gained 3.11% or 292 points to close at 9676. 

The metal index has shown a 12% gain this year, significantly outpacing the 4% increase of the benchmark index.

The rise in metal stocks is attributed to increasing demand for commodities as the dollar weakens, making it more economical for international buyers to purchase in larger quantities. 

Anubhav Sangal, Sr. Research Analyst at Bonanza Portfolio said, “Generally, when the dollar weakens, international buyers of commodities can buy more units for $1 as the commodities are traded in dollars. This comes as a positive news for Indian metal producers as the demand increase could indicate improved production for the Indian mills. Furthermore, this has led to an upward EBITDA revision for the metal producers in India for FY26.”

Other gainers included Hindustan Copper (4.31%) , SAIL (5.44%), and Jindal Steel and Power (5.49%) while companies like National Aluminium Company (Nalco), JSW Steel, Hindalco Industries, Vedanta, and NMDC saw gains of 2-3%.

The BSE metal index was the top sectoral gainer today, rising 961 pts to close at 32,138. 

Looking ahead, analysts at ICICI Securities remain optimistic about long-term prospects, noting “they remain long-term positive on the stock, supported by capacity expansion, strong demand outlook, a cash-rich balance sheet, and healthy RoCE.” In the aluminium sector, the demand is expected to grow due to “strong government infrastructure development plan, urbanisation, and growing focus on lightweight vehicles,” according to industry insiders.

Meanwhile, the government is exploring measures to reallocate non-operational iron ore mines to boost supply for steel production. These steps align with its target to achieve 300 million tonnes of steel output by 2030, requiring an estimated 437 million tonnes of iron ore.