Metal Stocks Decline Up to 10% Weekly Despite Strong 2025 Performance
Metal stocks declined up to 10% in early 2026 despite strong 2025 performance, with Nifty Metal index falling 3% weekly amid US tariff concerns and profit booking. The sector remains the second-best annual performer with impressive gains led by Hindustan Copper's 121% returns. Market experts maintain constructive outlook citing structural demand changes and strong fundamentals supporting selective investment opportunities.
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Metal stocks have entered 2026 on a weaker note, with several companies declining up to 10% in the first week despite delivering stellar performance throughout 2025. The correction comes amid profit booking by investors and renewed concerns over potential US tariff threats, though market experts believe the sector's strong fundamentals could support further upside through selective stock picking.
Weekly Performance and Market Impact
The Nifty Metal index recorded a 3% weekly decline, making metals the second worst-hit sector after Oil & Gas during the broader market correction. The sell-off contributed to nearly ₹9.00 lakh crore being wiped out from investors' wealth in the first seven trading sessions of the new year.
| Stock | Weekly Performance |
|---|---|
| Jindal Stainless | -10% |
| Welspun Corp | -7% |
| Jindal Steel | -7% |
| Lloyds Metals & Energy | -6% to -1% range |
| Adani Enterprises | -6% to -1% range |
| NMDC | -6% to -1% range |
| National Aluminium Company (NALCO) | +5% |
Other major players including Hindustan Copper, Hindustan Zinc, Hindalco Industries, Tata Steel, APL Apollo Tubes, JSW Steel, Steel Authority of India (SAIL), and Vedanta also declined between 1% and 6%. NALCO emerged as the lone gainer with a 5% uptick during the week.
Strong Annual Performance Despite Recent Weakness
Despite the recent correction, metal stocks have delivered impressive returns over the past year. The Nifty Metal index stands as the second-best sectoral performer with returns that trail only the Nifty PSU Bank index's 37% gains.
| Company | 12-Month Returns |
|---|---|
| Hindustan Copper | 121% |
| NALCO | 75% |
| Hindalco Industries | 53% |
| Vedanta | 20%+ |
| Hindustan Zinc | 20%+ |
| Tata Steel | 20%+ |
The strong performance has been driven by gains in base metals including copper and aluminium. However, some companies like Lloyds, Adani Enterprises, and Welspun have declined up to 12% over the one-year period.
Market Outlook and Expert Views
Jashan Arora, Director at Master Trust, emphasized that the metal sector's rally in 2025 represented a structural change rather than just momentum-driven gains. "Commodities cycle in 2025 beat all asset classes with leading performance by various metals including gold, silver, copper and zinc, and the long-term outlook for metals remains constructive," Arora stated.
Drumil Vithlani, Technical Analyst at Bonanza, maintains a positive outlook on the sector, citing improving global metal prices and expectations of higher infrastructure and energy-transition demand. The Nifty Metal index has entered a strong bullish phase after breaking out of a long consolidation zone, supported by rising volumes and improving momentum.
Q3 Earnings Expectations
Brokerage Emkay anticipates a mixed third quarter for metals and mining firms. Ferrous earnings are expected to face pressure from weaker realizations and higher coking-coal costs, driving sequential EBITDA declines. In contrast, non-ferrous earnings should remain healthy, led by aluminium and zinc price gains, supporting strong performance at Vedanta and NACL Industries.
Investment Recommendations
Technical analysts favor selective positioning within the metal space. Vithlani identifies Vedanta as a strong bet based on its technical breakout above multi-year resistance levels. For Hindustan Copper, he sees healthy pullback potential with strong support in the ₹475.00-₹450.00 zone. Emkay maintains buy recommendations on Tata Steel, SAIL, Hindalco, Vedanta, and NACL for investors seeking exposure to the sector's long-term structural trends.
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