Should you be wary of metal stocks in 2025?
Subscribe to enjoy similar stories. MUMBAI : While sectors like financials and information technology (IT) are stealing the spotlight with bullish predictions, metals seem to be the market's underdog. Several fund managers either recommend steering clear of the sector or keeping exposure to a minimum.
Over the past six months, the Nifty Metal has tumbled over 13%, starkly underperforming the broader Nifty 50, which has slipped by just 2%. All constituents of the Nifty Metal index, barring National Aluminium Co. Ltd (Nalco) and Welspun Corp.
Ltd, have given negative returns over the past six months. Hindustan Zinc has been hit the hardest, plunging 32%, followed by Steel Authority of India Ltd (Sail) and Hindustan Copper Ltd, which have seen declines of 24% and 23%, respectively. Many fund managers believe that investors should hold off for now and take another look at the sector once there is more clarity on China’s recovery and the US trade policy under the new administration.
Sunil Damania, chief investment officer (CIO) of asset management company MojoPMS, said two factors drive the cautious approach to metals. First, the Indian economy has been grappling with subdued growth, as reflected in disappointing gross domestic product (GDP) numbers over the last two quarters. This sluggishness directly impacts demand for metals across key industries such as construction, infrastructure, and automotive.
Second, increased imports of cheaper metals from neighbouring countries have significantly affected domestic metal companies' realizations. This dumping practice exerts pressure on margins and disrupts market dynamics, further weighing the sector's performance. “The sector's trajectory is closely tied to developments in China,
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