Nifty Metal Index Falls 1.6% After Five-Day Rally: What’s Behind the Drop?

The Nifty Metal Index experienced a 1.6% decline on Monday, February 24, 2025, after surging for five consecutive trading sessions. Major metal stocks such as National Aluminium Company (NALCO), Steel Authority of India Limited (SAIL), and Vedanta were among the top losers, reflecting broader concerns in the global and domestic metal markets.

This dip comes amid weak global sentiment, rising supply pressures, and concerns over US tariffs on steel and aluminium imports. Let’s take a deep dive into what’s driving this correction, how it impacts Indian metal stocks, and what investors can expect in the coming weeks.

Key Reasons Behind Nifty Metal’s Decline

1. US Tariffs on Steel and Aluminium Imports

The United States recently announced a 25% tariff on all steel and aluminium imports, which has sent ripples across global markets. While India is not a major exporter of metals to the US, the global pricing shift is affecting domestic market dynamics.

Any increase in protectionist trade policies by the US could lead to diversion of metal exports from China and other Asian nations into India, creating an oversupply situation.

2. Surge in Chinese Steel Exports to India

According to analysts, Chinese steel exports to India surged by 22.8% year-over-year from April to November 2024. With the US imposing higher tariffs on Chinese metal imports, it is expected that nearly 4 million tons per year of steel—originally intended for the US—could be redirected to India.

This flood of cheaper Chinese steel has led to:
✅ Increased competition in the Indian market
✅ Falling domestic steel prices
✅ Reduced profit margins for Indian metal companies

3. Speculation Over Domestic Safeguard Duties

There has been speculation that the Indian government may introduce safeguard duties to protect the domestic metal sector. While this could be a long-term positive, the current uncertainty is making investors cautious.

4. Technical Selling & Derivative Expiry Pressure

In addition to fundamental factors, the market is also witnessing technical selling pressure due to the derivative expiry later this week. Many traders are booking profits after last week’s rally, leading to further volatility.

5. Global Weakness in Metal Prices

The London Metal Exchange (LME) and

have reported weakness in base metal prices, further adding to the bearish sentiment in the Indian metal sector.

Stock-Wise Performance: Top Losers in Nifty Metal

Investors should watch these stocks closely, as further downside could be expected if global metal prices remain weak.

Investor Outlook: What’s Next for Nifty Metal?

1. Volatility Expected in the Short Term

With global trade tensions, tariff uncertainties, and derivative expiry pressures, the Nifty Metal index is likely to remain volatile in the near term.

2. Potential Government Intervention

The Indian government might introduce safeguard duties to protect domestic manufacturers from the influx of cheaper Chinese imports. If announced, this could provide support for metal stocks in the medium term.

3. Long-Term Growth Still Intact

Despite short-term pressures, India’s infrastructure boom, increasing domestic steel consumption, and government investments in construction provide a strong long-term growth outlook for the metal sector.