Silver ETFs Surge as Prices Hit Record Highs

On Wednesday, the price of silver for future delivery increased nearly 6.5% to ₹379,400 per kilogram, marking a record high. Shares in the Silver Exchange Traded Funds (ETFs) followed suit with all-time highs, despite the price of Hindustan Zinc shares falling more than 3%. This drop resulted in Vedanta Group’s stock price closing at ₹705.10 after two consecutive sessions of gains. Similar gains in other ETF providers were primarily due to the increase in the value of precious metals. 

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Hindustan Zinc Shares Decline

Vedanta has announced an offer for sale of 6.7 crore equity shares of Hindustan Zinc, representing a 1.59% stake. The offer will be available to non-retail investors starting today at a floor price of ₹685, which is 6% lower than the most recent closing price. 

Offers for the retail portion will be made available on January 29. As of the end of December, promoters owned 61.84% of Hindustan Zinc’s issued share capital and, post-sale, this is expected to decrease to 60.25%. 

The Central Government currently holds a 27.92% stake in Hindustan Zinc based on its position from October to December.

Silver Price Rally Lifts ETFs

Contracts due to expire in May and July are up almost 6% to new records at ₹3,95,000 and ₹4,11,451 per kg, respectively.

Aditya Birla Sun Life Silver ETF has risen almost 6% to its highest-ever price at ₹352, while the Silver ETFs managed by Motilal Oswal, ICICI Prudential, Axis, Nippon and Groww have seen rises of 5% each.

Mirae Asset Silver ETF has risen by approximately 5%; however, all other Silver ETFs managed by SBI, Zerodha, and DSP have seen gains of 4% or more.

Shares of Vedanta have also increased by over  4% to ₹735 this week.

Market Divergence Amid Promoter Action

Hindustan Zinc has been affected by reports of a sale of shares to fund balance sheet activities in light of the recent increase in the spot market price of silver. Similar sales have occurred on two occasions in the past two years, creating sufficient funds to maintain the balance sheet.

ETF investors directly benefit from the momentum created by the upward movement in the spot price of Silver. The precious metals segment appears to be demonstrating continuity despite the overall status of trading activities, providing additional strength.