Metal Stocks Crash: Vedanta, Hindustan Zinc Lose ₹69,000 Crore

Metal stocks on Dalal Street faced a severe downturn on January 30, 2026, as a combination of factors triggered a widespread sell-off. The Nifty Metal index plunged nearly 5%, ending a three-day winning streak and emerging as the worst-performing sector. This sharp correction was driven by investors booking profits after a significant rally, coupled with a steep decline in global commodity prices and a cautious sentiment prevailing in the broader market ahead of the Union Budget.

A Sector-Wide Sell-Off

The selling pressure was not confined to a few stocks but was felt across the entire metal sector. Leading the pack of losers, shares of Hindustan Copper plummeted by as much as 17.43%. Other major players also witnessed substantial losses. Hindustan Zinc and National Aluminium Company (NALCO) both hit their 10% lower circuit limits. Vedanta Ltd. also saw its stock tank by over 11%, marking its largest single-day fall since June 2022. The sell-off resulted in a massive erosion of investor wealth, with the Nifty Metal index losing a collective ₹1.25 lakh crore in market capitalization in a single session.

Key Stock Performance Summary

Profit Booking After a Stellar Rally

A primary reason for the sharp correction was aggressive profit booking. In the month leading up to the fall, the Nifty Metal index had surged by 16%, significantly outperforming the Nifty 50, which had slipped by around 2% during the same period. Several metal stocks had delivered gains of up to 56% and touched their all-time highs just a day before the sell-off on January 29. After such a rapid ascent, a pullback was anticipated as investors moved to lock in their gains, leading to a broad-based decline across metal counters.

Global Headwinds and Commodity Price Crash

The domestic sell-off was amplified by negative cues from global markets. Prices of key commodities, including base metals and precious metals, witnessed a sharp correction. On the MCX, copper futures plunged 8%, while aluminum futures also dropped 8%. Precious metals were not spared, with gold and silver futures crashing by around 6%. This downturn in commodity prices was partly fueled by a strengthening US dollar, which makes dollar-denominated assets like metals more expensive for holders of other currencies. Additionally, technical issues at the London Metal Exchange (LME) that delayed trading added to market uncertainty and volatility.

Company-Specific Nuances

While the sell-off was sector-wide, some company-specific factors were also at play. Vedanta, for instance, fell despite reporting strong Q3 FY26 results, where its net profit surged 60% year-on-year to ₹7,807 crore. This indicates the market sentiment was overwhelmingly negative for the sector, overshadowing individual company performance. For Hindustan Zinc, the ongoing Offer for Sale (OFS) by its promoter, Vedanta, created additional supply pressure on the stock, contributing to its decline. Despite this, the company had recently become India's most valued metal company, crossing a market capitalization of ₹3 lakh crore, fueled by a rally in silver prices.

Budget Expectations and Policy Outlook

The timing of the sell-off, just ahead of the Union Budget 2026, also played a role. The market was anticipating policy announcements related to the metal sector, including a potential increase in customs duty on aluminum products and a reduction in duty on coking coal. Such expectations often lead to increased volatility. However, the long-term policy outlook remains constructive. The government's classification of coking coal as a "Critical and Strategic Mineral" is expected to streamline approvals and boost domestic production, benefiting steelmakers in the long run. Brokerages like Anand Rathi also noted that a policy framework supporting 'Make in India' would be a major positive for companies like Hindustan Copper and Hindustan Zinc by reducing import reliance.

Conclusion

The sharp correction in Indian metal stocks on January 30 was a result of a perfect storm of profit booking after a strong rally, a significant downturn in global commodity prices, and cautious sentiment ahead of the Union Budget. While the immediate trigger was external, the underlying fundamentals for many companies, like Vedanta, remain robust. The sector's trajectory in the near term will likely remain tied to global commodity price movements and domestic policy announcements. However, long-term demand drivers from infrastructure, green energy, and manufacturing continue to provide a stable foundation for the sector's growth.