Metal stocks came under pressure on Tuesday, with shares dropping up to 2% after recording sharp gains in the previous session. According to reports from The Economic Times, Nifty Metal dropped half a per cent amid an overall bearish market sentiment. NMDC shares fell more than 2% to lead the losses, while Hindustan Copper shares lost over 1% after rallying around 8% in the previous session. The latest decline comes as metal prices corrected after hitting multi-month highs, with copper prices falling as the market digested disappointing economic data from China and the US-Iran truce expired without a longer-term peace deal.
The fall in metal stocks comes as metal prices corrected after hitting multi-month highs the previous day. As reported by The Economic Times, copper prices fell as the market digested a string of disappointing economic data from China, and the US-Iran truce expired without a longer-term peace deal. This correction follows copper hitting its highest in more than six months on Monday amid worries around availability on the London Metal Exchange, where inventories are at their lowest since February. Gold and silver prices also declined in the domestic market, although the precious metals extended gains in the international market.
Despite the current correction, analysts see selective opportunities in the metal sector. According to Sunny Agrawal from SBI Securities as reported by The Economic Times, investors can selectively participate in a few names like Nalco and Hindustan Zinc. The analyst advises traders to adhere to stop loss to factor in sudden correction in underlying metal prices, which is a function of many factors including dollar index and global demand-supply dynamics. Analysts are advising investors to view profit-booking-led corrections as buying opportunities, with the broader sectoral setup now turning increasingly constructive.
The sectoral index seems to have established a strong support zone in the 12,500–12,400 band, underscored by the formation of a weak breakout on its daily 1% renko chart. As reported by The Economic Times, following this development, the index has already rallied by over 5% in a relatively short period, indicating a meaningful improvement in momentum. The combination of a well-defined support zone and bullish breakout formation suggests the presence of strong demand at lower levels and points towards a potential reversal in the broader trend.
Given the sharp upmove witnessed recently, chasing momentum at current levels may not offer the most favourable risk-reward proposition. According to the technical analysis reported by The Economic Times, any retracement towards the 12,800–12,700 band should be viewed as an opportunity to accumulate select metal stocks, with the broader sectoral setup now turning increasingly constructive. The analysts emphasize that investors should focus on selective participation rather than broad-based exposure, given the current market dynamics and global uncertainties affecting metal prices.
