India's Nifty Metal Index Drops 8% in One Month Amid Market Volatility

Nifty Metal Declines 8.53% Amid Global Risk Aversion and Supply Chain Disruptions

Key Highlights:

• Nifty Metal has declined by 8.53% over the past month due to a mix of heightened global risk aversion, tariff news, volatility in base metal prices, increased trading margins, and substantial profit-taking in stocks that excelled throughout 2025.
• Axis Securities suggests a "Buy on Dips" approach for the metals sector, citing demand factors and supply limitations that support non-ferrous metals, while safeguard duty and strong domestic steel demand benefit Indian steel producers.

Market Analysis:

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• The brokerage firm notes that escalating geopolitical tensions in the Middle East have resulted in a rise of 14% in HRC prices and 7% in rebar prices thus far this quarter, whereas coking coal and iron ore prices have only increased by approximately 2% during the same timeframe, leading to wider spot spreads.
• In the first quarter of FY26, average prices for steel HRC have risen by 11% year-over-year, which is expected to lead to increased spreads for steel mills based on consumption in Q4FY26.

Sector Impacts:

• Disruptions in the Strait of Hormuz are expected to have a substantial effect on the inflow of LNG, propane, and LPG, presenting challenges for India's steel industry, especially for gas-reliant manufacturers.
• JSW Steel may encounter operational challenges at certain facilities, particularly within its coated products division, while AMNS India is at greater risk due to approximately 65% of its 9 mtpa capacity being reliant on gas-based DRI and electric arc furnace technology.

Stock Recommendations:

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• Tata Steel and Coal India Limited have been assigned a "Buy" rating with target prices of ₹220 and ₹500, respectively.
• APL Apollo Tubes also carries a "Buy" call with a target of ₹2,250.
• Steel Authority of India Limited (SAIL), Hindalco Industries, and National Aluminium Company (NALCO) are rated "Hold" with target prices of ₹160, ₹1,050, and ₹390, respectively.