Metal stocks in focus: Indian metal stocks have made a strong comeback from their recent lows, delivering massive returns to investors in a very short span, driven by both global and domestic cues.

Six stocks from the Nifty Metal index have surged over 30% from their April 7 lows, with Nalco emerging as the top performer, gaining 33% to reach ₹183 apiece. It was followed by Jindal Stainless, which rose 32.25%, while Hindustan Copper, Vedanta, Hindalco Industries, and NMDC rallied 26%, 22.7%, 21.4%, and 19.22%, respectively, during the same period.

What’s behind the rally in metal stocks?

The renewed interest in metal stocks was triggered after US President Donald Trump paused tariffs on major trading partners and engaged in active discussions for a broader trade deal, which was sealed with China last week. Although the agreement is temporary, the truce between the world’s two-largest economies brought relief to metal counters. Prior to this UK also struck a trade deal with the US.

The latest trade deals with major partners have raised hopes that Washington might roll out trade agreements with other key partners in the near term, including India, with recent reports suggesting that talks between the two nations are progressing well.

The easing of trade war concerns has also helped reduce fears of a global economic fallout, with analysts now seeing a lower risk of the US slipping into recession in 2025. Meanwhile, the weakening US dollar has also aided the rally in metal stocks, as a soft dollar makes dollar-denominated metals cheaper for investors using other currencies.

On the domestic front, expectations of a revival in demand in the current fiscal year, coupled with India’s safeguard duties on steel imports, are also supporting the rally. Moreover, recent reports indicate that India’s manufacturing sector will be a key beneficiary of the ongoing shift in global supply chains.

India’s manufacturing sector is increasingly attracting global investors, with the country poised to capitalise on these opportunities, research firm S&P Global said on Monday. India is well-positioned to benefit from shifting global trade dynamics and cooperation trends, with its economy projected to become the world’s third-largest by FY31, S&P Global added.

China’s Policy Push

Despite the front-line indices continue to remain in a narrow range in today’s session (May 20), Nifty Metal gained over 1% after China cut its key lending rates by 10 basis points on Tuesday, as a stronger yuan and easing trade tensions gave it room for monetary easing aimed at boosting the economy.

The People’s Bank of China trimmed the one-year loan prime rate (LPR) to 3.0% from 3.1% and the five-year LPR to 3.5% from 3.6%. This marked the first rate reduction since the central bank’s 25-basis-point cut in October, as Beijing intensifies efforts to shore up growth. The rate cuts are part of a broader stimulus package announced earlier this month, which also includes reductions in lending rates and the amount of cash that banks must hold in reserves.

The trade truce between the US and China prompted several global investment banks to raise their forecasts for China’s economic growth this year while scaling back expectations for more aggressive stimulus, as Beijing strives to meet its growth target of around 5%.

Meanwhile, experts project that China may roll out additional stimulus measures in the coming months to counter deflationary pressures.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.