Vedanta, Tata Steel, Hindalco…why are metal stocks rising? What should you buy from the sector?

Most metal stocks have posted strong gains in recent days, lifting the sectoral index, which had been under pressure for five consecutive months.

As of March 18 close, the Nifty Metal index has gained about 10 per cent this month, significantly outperforming the Nifty 50 index which has risen a little over 3 per cent.

Some of the index majors such as Vedanta (up 17 per cent), Tata Steel (13 per cent), Hindustan Zinc (12 per cent), Jindal Stainless (11 per cent), Adani Enterprises (10 per cent) and Hindalco (10 per cent) have seen robust gains this month.

Barring APL Apollo Tubes, which is down about 0.40 per cent, all components of the Nifty Metal index are in the green this month, with gains ranging from 4 to 17 per cent.

However, the metal index is still 12 per cent down from its 52-week high of 10,322, which was hit on October 3 last year.

On a monthly scale, the Nifty Metal index has remained in the red from October 2024 to February 2025, cumulatively losing over 19 per cent.

Why are metal stocks rising?

Experts attribute the recent rise in the metal stocks to signs of economic recovery seen in the Chinese economy and expectations of a safeguard duty on steel in India.

Government body the Directorate General of Trade Remedies (DGTR) on Tuesday recommended a 12 per cent safeguard duty on certain steel products for 200 days.

“Metal stocks are gaining traction, driven by China’s recovery, expectations of a safeguard duty on steel in India, and strong aluminium prices,” said Ajit Mishra, SVP of research at Religare Broking.

“The Asian steel spread remains approximately 20 per cent below its long-term average, indicating potential for further expansion. Indian steel prices have climbed 5% from their December lows, and the introduction of a safeguard duty could further boost margins and valuations,” Mishra said.

Devarsh Vakil, Head of Prime Research at HDFC Securities, believes the sector is experiencing a rising demand tailwind.

“Steel demand in India has been growing at a robust pace, consistently outperforming other major economies. While most major markets have experienced demand contraction, India has maintained impressive double-digit growth in recent years. This strong domestic outlook creates significant opportunities for Indian steel manufacturers, who are strategically expanding capacities and enhancing their value-added production portfolio,” said Vakil.

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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.