Metal stocks experienced significant selling pressure on Monday, with major players declining between 2.5% and 4.8%. According to latest NSE data, the Nifty Metal index declined 2.5% or 227 points intraday to a low of 13,187.40 points on Monday, August 31, 2026, compared to 13,525.35 points at the previous equity market close. As of the afternoon session, Nifty Metal was trading 2.1% lower at 13,230.20 points. The decline was driven by profit booking after the index's strong August rally, which had seen the Nifty Metal surge more than 6% in August so far, outperforming major sectoral indices. Metal stocks have significantly outperformed the benchmark NIFTY50 index in the last one-month due to high commodity prices, supply disruption fears and falling inventory concerns in the global market, with the sectoral index delivering 4% returns in the last one-month period while the NIFTY50 lost 1.4% in the same period.
The decline was triggered by hawkish comments from US Federal Reserve Chair Kevin Warsh, who raised concerns about inflation control. As reported by LiveMint, Warsh said the US central bank would "have work to do" if policymakers did not gain the confidence needed to ensure inflation was heading towards the 2% target. Markets currently see a 57% chance of a rate hike at the Federal Reserve's next policy meeting in September, compared with 36% before Warsh's comments, according to the CME FedWatch tool. US Personal Consumption Expenditure (PCE) rose 3.7% year-on-year in July, indicating that inflation remained above the Federal Reserve's 2% target for the 65th consecutive month. Warsh's comments came closer than he has to acknowledging that interest rate hikes may be needed to ease price pressures, with higher interest rates often weighing on gold prices since holding a non-yielding asset becomes less attractive. SMC Global noted that base metals prices are under pressure as Federal Reserve Chairman Kevin Warsh came his closest yet to acknowledging interest rate hikes may lie ahead.
Major metal stocks experienced significant declines across the board, with 13 of the 15 Nifty Metal constituents trading lower. Adani Enterprises declined over 4%, while National Aluminium Co (Nalco) fell over 2%. Hindustan Zinc, a major silver producer, fell over 4%, with its parent company Vedanta declining more than 3%. Major aluminium producers Hindalco Industries and National Aluminium Co fell nearly 4% and over 2% respectively. September aluminium futures were flat at ₹345.7 per kg on the Multi Commodity Exchange. The broad-based decline reflects the sector's sensitivity to interest rate expectations and their potential impact on commodity prices.
The weakness extended to precious metals markets, with silver prices declining significantly. According to LiveMint, silver futures for October delivery fell nearly 1% to USD 66.86 per ounce on the COMEX. Hindustan Zinc, a major silver producer, fell over 4%, while its parent company Vedanta declined more than 3%. In domestic markets, MCX gold October futures declined by more than ₹2,600, or nearly 2%, to ₹1,53,640 per 10 grams, and MCX silver September contracts plunged by over ₹4,200, or almost 2%, to ₹2,32,501 per kg in early trade. However, US gold futures for December delivery fell 0.6% to $4,504.90, showing some recovery from earlier lows. Among other metals, spot silver was flat at $66.34 per ounce, platinum edged 0.1% higher at $1,822.46, and palladium gained 0.2% to $1,424.89.
Despite recent profit-booking pressure, the Nifty Metal index has delivered more than 131% returns on its investment in the last five years, over 98% in the last three years, and more than 44% returns in the last one-year period. However, due to profit-booking pressure, the Nifty Metal index is trading 1.1% lower over the last five market sessions. Market experts predict that although metal production companies have shown strong performance in Q1 due to margin gains, concerns remain over the near-term pressures in the market. The possibility of higher US interest rates weighed on bullion and base metal prices, as a rate hike can also put pressure on metal shares as lower commodity prices can affect the earnings outlook of metal producers. Key focus of investors will remain on the government's policies along with the anti-dumping norms in India, but any pullback in global prices can impact company margins at a time when concerns loom due to higher input costs.
