These are the reasons for the sudden huge fall in the shares of metal companies including Vedanta Share

News Topical, Digital Desk : Metal stocks witnessed a sharp sell-off on November 18, with heavyweights like Hindustan Zinc and Hindustan Copper among the worst hit. A strengthening dollar, diminishing expectations of a Fed rate cut, and market caution ahead of global economic data all added to the pressure on the metal sector. The Nifty Metal Index slipped 1.5% to 10,325, while prices of several base metals continued to weaken. Investors are now awaiting the US non-farm payrolls report.

Let's explore the reasons why metal stocks are falling.

The Nifty Metal Index fell nearly 1.5% throughout the day to 10,325, the weakest performer among 16 major sectors. Investor fears were evident, as a stronger dollar makes metals like copper, aluminum, and zinc more expensive, directly impacting global demand. Hindustan Zinc and Hindustan Copper led the selloff, both falling by nearly 3%. SAIL also saw a decline of over 2%. The dollar index remained stable at 99.5, but Asian currencies showed slight weakness (0.1% to 0.6%) as investors awaited important US economic data this week. The US Non-Farm Payrolls Report, due on Thursday, will have a major impact on the Fed's next move, and this is why investors are avoiding riskier assets. Expectations of a 25-basis-point rate cut by the Fed in December have weakened. According to CME FedWatch, the probability of a rate cut has dropped from 62.4% last week to 42.9% now. When the Fed keeps rates high, the dollar strengthens, suppressing metal prices. Higher US interest rates also reduce the attractiveness of foreign investment in emerging markets (like India), thus slowing FPI flows into metal stocks. Traders are also monitoring another risk: the growing diplomatic tension between China and Japan. If this dispute escalates, metal trade between the two countries could be affected, which would impact global prices. The decline in AI and tech stocks in the US has also weakened global market sentiment. The market is trying to avoid risk ahead of major events, and this is directly impacting metals. 

The Story of Aluminium: Pressure from a Three-Year High - Aluminium prices had reached a three-year high in early November, but since then, prices have been slipping due to concerns over global demand and pressure from US monetary policy. However, interestingly, due to depleting inventories in the US, Rio Tinto has started imposing a surcharge on US buyers. 

Big Fact for 2025 - The Nifty Metal Index has gained around 19.5% so far in 2025, which is double the 9.5% return of the benchmark Nifty. But currently, caution prevails in the market.

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