Vedanta, SAIL, and Hindalco are tumbling as global trade tensions, rising costs, and profit-booking shake the market
Metal stocks in the Indian stock market have been facing a tough time lately. Companies like Vedanta, SAIL (Steel Authority of India Ltd), and Hindalco have all seen their share prices fall sharply in June 2025. This drop comes after a strong performance in May when metal stocks rallied due to global optimism and improved trade relations. But now, things have changed, and the sector is struggling once again.
This article explains why metal stocks are under pressure and what is causing investors to pull out of companies like Vedanta, SAIL, and Hindalco.
Market Overview: Decline After a Rally
In May 2025, metal stocks performed very well. Many investors bought into the sector, hoping for continued growth due to positive news, such as the removal of certain export restrictions and better demand in some global markets. However, in June, the Nifty Metal Index fell by nearly 2.7% in just three days. This fall wiped out some of the gains made in the previous month.
Now, shares of major metal producers are trading lower due to several key reasons. These include profit-booking by investors, rising input costs, currency-related pressures, and fears over global demand for metals.
Reasons Behind the Fall
1. Profit-Booking After May Rally
One of the main reasons for the fall is simple: investors are booking profits. After a strong rally in May, many chose to sell their shares in June to secure their gains. This led to a large number of sell orders in the market, which pushed prices down across the metal sector.
Profit-booking is a common strategy used by traders when they believe the stock has reached a temporary peak. It doesn’t necessarily reflect bad fundamentals, but it can cause short-term declines in prices.
2. Strong U.S. Dollar and Federal Reserve Policy
A strong U.S. dollar is hurting metal companies. Commodities like steel and aluminium are priced in dollars worldwide. So, when the dollar becomes stronger, it increases the cost of raw materials and imported items for Indian metal companies.
The U.S. Federal Reserve has also made it clear that interest rates will remain high for longer than expected. This puts pressure on commodity prices, which usually perform better in a low-interest environment. As a result, metal companies are facing tighter margins.
3. Global Trade and Geopolitical Uncertainty
Geopolitical tensions, especially in the Middle East and Asia, have created fears around global trade stability. Ongoing issues between countries like the U.S. and China are also affecting investor confidence. If trade slows down, demand for metals like steel, copper, and aluminium may also drop.
Higher oil prices, which have risen due to the conflict in the Middle East, are further increasing costs for metal producers. Fuel is a major input in mining and transportation, so these companies are seeing their production costs rise.
4. U.S. Tariffs on Steel and Aluminium
The United States recently increased tariffs on imported steel and aluminium from certain countries, including China. While India is not a major exporter of metals to the U.S., these global moves still affect investor sentiment. Fears of a larger trade war and decreased global demand are pushing stock prices lower, even for Indian companies.
Company-Specific Details
Vedanta Ltd
Current Share Price: Around ₹442
Vedanta recently announced a dividend of ₹7 per share, which usually attracts investors. Despite this, the stock has dropped more than 3% in recent days.
One reason for the fall is the rising cost of production due to a strong U.S. dollar and higher fuel prices.
Analysts still believe the stock has potential, with some predicting a price target near ₹510, suggesting about 16% upside.
SAIL (Steel Authority of India Ltd)
Current Share Price: ₹105–₹106 range
SAIL’s performance has been weaker compared to peers like Tata Steel. The company has faced heavy selling due to profit-booking and concerns about international demand for steel.
Though SAIL is supported by strong domestic demand and government infrastructure projects, the stock remains vulnerable to global changes.
Hindalco Industries
Current Share Price: Around ₹641
Hindalco has also seen its stock price fall by nearly 1.4% in recent trading sessions.
The company’s 3-month return is negative, showing it has struggled recently despite a slight gain over six months.
Analysts see long-term value in Hindalco, with some predicting a price target above ₹750.
Other Factors Affecting the Sector
Commodity Prices
Metal prices like aluminium, copper, and steel are closely tied to global economic health. If demand from large economies such as China, Europe, or the U.S. slows, these prices drop. This directly affects the revenues and profits of companies like Vedanta, Hindalco, and SAIL.
High Input Costs
Fuel, power, and raw material costs have been rising, especially with oil prices increasing again. These higher costs make it more expensive for companies to produce metal, putting pressure on their profits.
Government Policies and Safeguards
The Indian government has introduced a safeguard duty of 12% on some imported steel products, especially from China. While this helps protect domestic producers, it’s not enough to fully counter the negative global effects.
Outlook and What Lies Ahead
The metal sector is likely to remain under pressure in the near term. With international trade uncertainty, high input costs, and a strong dollar, companies may continue to face margin challenges.
However, many experts believe that long-term prospects remain strong due to ongoing infrastructure development in India and rising domestic demand for metal. If global tensions ease and commodity prices stabilize, metal stocks could bounce back.
Analysts also suggest that this current dip might be a good opportunity for long-term investors to look at quality metal stocks trading at lower prices.
Summary Table
|
Company |
Recent Price |
Fall (%) |
Analyst Target |
Remarks |
|
Vedanta |
₹442 |
–3.7% |
₹510 |
Dividend announced, strong outlook |
|
SAIL |
₹105–106 |
–1.5% |
N/A |
Profit-booking, global concerns |
|
Hindalco |
₹641 |
–1.4% |
₹750 |
Positive 6-month trend |
The recent fall in metal stocks such as Vedanta, SAIL, and Hindalco is driven by multiple global and local factors. These include profit-booking, currency pressures, trade-related worries, and rising costs. While the short-term trend appears negative, strong long-term demand and supportive domestic policies may help the sector recover over time.
Investors watching the metal sector should keep an eye on commodity price trends, U.S. interest rate policies, and India’s infrastructure push. These will play a key role in deciding how long the pressure on metal stocks lasts and when a recovery may begin.
