Nifty Metal skyrockets nearly 1,100 points in just 9 sessions, gains over 24% in 2024 – here’s why

In recent months, metal stocks have been performing exceptionally well, driven by a sharp increase in industrial metal prices. This surge has fueled investor optimism, with expectations that higher prices will significantly enhance companies' profit margins.

Against this backdrop, the Nifty Metal index, a barometer of metal stocks, surged by 1,078.45 points in just nine sessions to 9,919 points. Notably, in Tuesday's session, the index crossed the 10,000 mark for the first time and it recorded a new all-time high of 10,051 points in the previous trading session, marking its fourth consecutive record high.

So far in 2024, the Nifty Metal index has gained 24.34%, surpassing its entire CY23 return of 18.66% in less than five months. This performance positions the index as the second-best sectoral performer, following the Nifty Realty index.

Also Read: Hindustan Zinc stock hits 20% upper circuit to touch new record high; up 133% in CY24 so far – here's why

Among individual stocks, Hindustan Zinc emerged as the top performer in the index, boasting a staggering gain of 126% in the current year to date. Investors anticipate that the company will reap significant benefits from the substantial rally in zinc and silver prices. 

Other notable gainers include Vedanta, MOIL, NALCO, Jindal Steel, SAIL, Coal India, and NMDC, all of which have recorded gains ranging between 26% and 80% so far this year.

Supply disruptions drive prices up

The sharp rise in industrial metal prices can be attributed to a combination of increased demand from growing business activity in major economies and ongoing supply disruptions due to heightened tensions in key metal-producing nations.

Also Read: Hindustan Copper shares spike over 8% to 13-year high as metal price nears $10,000

Moreover, the recent ban on Russian metals, specifically nickel and aluminum, by Washington and London has raised concerns about potential disruptions to global supply chains.

Additionally, the rally has been bolstered by China's property support measures and better-than-expected industrial data, which have spurred momentum buying and driven base metal prices higher.

Further, banks, miners, and investment funds have been highlighting copper’s promising long-term prospects for months. A recent surge of investment into the market has further supported prices, keeping them at elevated levels.

Copper: Crosses $11,000 mark

Copper, a widely traded metal, hit historic highs this week across global exchanges, including LME, COMEX, and SHFE. In April, analysts from Citi, a global investment bank, projected that copper prices would reach $10,000 per metric ton by the end of the year and rise to $12,000 by 2026 under their base-case scenario. 

Also Read: How does RBI's cash disbursal limit affect gold loan customers?

However, copper futures already crossed the $11,000 mark on the LME during Monday's trade to hit an all-time high of $11,104.50 per ton. Copper is often viewed as a barometer of economic vitality due to its extensive use in various industries. 

This essential base metal plays a crucial role in the energy transition ecosystem, serving as a vital component in the manufacturing of electric vehicles, power grids, and wind turbines.

Nickel: 9-month high 

Concurrently, Nickel prices surged to $21,762 per ton on the LME this week as investors expressed concerns over potential supply disruptions arising from heightened tensions in New Caledonia, the world’s third-largest producer of the EV metal.

Reports of unrest in French-ruled New Caledonia prompted a significant effort to regain control of the capital, Noumea, in a country that contributed 6% of global nickel mine output last year.

Also Read: Silver price may hit Rs1,00,000 on MCX by June; 5 key triggers driving rally

Aluminium: 2-year high 

Similarly, Aluminium, utilised in the power, construction, and transport sectors, reached a nearly two-year peak of $2,765.50 per ton this week, driven by supply concerns following Rio Tinto's declaration of force majeure on third-party contracts for alumina exports from its refineries in Queensland, Australia, as per the media reports. 

Gold: Historic level

Precious metals also rallied sharply this week, with Gold reaching a record high of $ 2450 per troy ounce this week and Silver prices hitting a 12-year peak. Platinum also surged past $1,000 per troy ounce to reach $1,104 per troy ounce, marking its highest level in almost a year, driven by fears of supply shortages and indications of robust demand.

Disclaimer: We advise investors to check with certified experts before taking any investment decisions.