Metal Stocks Surge Up to 7% as Dollar Weakens, China Stimulus Boosts Sentiment

On March 6, metal stocks experienced notable gains as investor sentiment remained buoyant, driven by expectations of China's economic stimulus and a weakening US dollar. This surge propelled the Nifty Metal Index nearly 3% higher, reaching 8,918, marking its fourth consecutive session of gains.

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Jindal Stainless Limited's (JSL) share price led the rally, climbing almost 7% to trade at ₹654 per share. Having previously hit a 52-week low of ₹568 on February 17, the stock has rebounded by approximately 15% from that level. However, it remains 23% lower than its 52-week high of ₹848, recorded in July last year.

The share price of Ratnamani Metals and Tubes advanced over 4% to ₹2,658, while Welspun Corp’s share price and Hindalco’s share price also gained more than 4%, trading at ₹790 and ₹684, respectively.

Tata Steel’s share price, a heavyweight in the sector, surged nearly 4% to ₹151.86, significantly contributing to the Nifty Metal index's upward movement. The stock is currently trading well above its 52-week low of ₹122.62, which it had hit in January this year.

Additionally, shares of Hindustan Zinc, Vedanta Limited, Hindustan Copper, and NMDC rose by over 3%, while Jindal Steel and National Aluminium Company (NALCO) gained more than 2%.

Other stocks, including JSW Steel, Adani Enterprises, and SAIL, traded in positive territory, albeit with marginal gains. However, APL Apollo Tubes went against the trend, slipping by 0.6% to ₹1,466 per share.

Driving Factors Behind the Surge

Market participants are anticipating further stimulus measures from China to spur domestic consumption and mitigate the economic effects of intensifying trade tensions with the United States, following stringent tariffs imposed by US President Donald Trump.

"Base metals rallied in Asian trade on the prospect of further China stimulus measures," said Daniel Hynes, senior commodity strategist at ANZ Bank, in a statement to Reuters.

In addition, the dollar index fell to a four-month low on Thursday, making dollar-denominated commodities more affordable for investors holding other currencies—an advantageous development for emerging markets like India.

"European defense spending measures are also boosting (metals') growth outlook while simultaneously weakening the US dollar," observed Kyle Rodda, senior financial markets analyst at Capital.com, in a statement to Reuters.

China's Steel Industry Restructuring

On March 5, steel stocks witnessed a significant rally following China's announcement of plans to restructure its steel industry to curtail overall production. This move is expected to limit the influx of cheap steel into India, offering a major boost to domestic steel manufacturers.