The Sector That Cannot Catch a Break | Nifty Metal

Nifty Metal has declined the most among all sectoral indices in Wednesday's early trade, with Hindalco Industries and Tata Steel among the top Nifty50 losers. For a sector that was up 15 per cent year to date as recently as two weeks ago, the August reversal has been sharp and consistent. The Nifty Metal index fell nearly 2.7 per cent over just two sessions last week — August 13 and 14 — with NALCO, SAIL, Hindalco and Hindustan Zinc among the worst performers, shedding between 4 and 10 per cent in that two-day window. The primary trigger was news that Norsk Hydro's Alunorte alumina refinery in Brazil ramped up production as natural gas supply improved — increasing global alumina supply and putting immediate pressure on aluminium prices and producers like Hindalco.

The irony is not lost on anyone tracking this sector. Just one week earlier, the same Norsk Hydro had cut Alunorte output to 50 per cent of capacity due to a gas shortage — which sent NALCO up 7.89 per cent and Hindalco up 2.65 per cent in a single session. A single operational update from a Brazilian refinery moved the entire Indian metals complex by 5 to 10 per cent in each direction within seven days. For Hindalco specifically, the stock has fallen sharply on debt concerns following the Novelis disruption, and the current price still implies a favourable aluminium price of $3,075 to $3,100 per tonne on the LME. HSBC maintains a Buy call with a target of Rs 1,210, making it the brokerage's preferred pick in the India metal and mining space. Today's early move makes Hindalco the third session in a row of underperformance. Whether global alumina supply news stabilises — or another Alunorte update changes the picture again — is now the single most important variable for the entire metal sector on a daily basis.