Metal stocks: Hindalco, Tata Steel, JSW Steel, Vedanta shares rally up to 6%; here's why

Shares of metal producers including Hindalco Ltd, Tata Steel Ltd, JSW Steel Ltd, SAIL Ltd and Vedanta Ltd climbed up to 6 per cent in Friday's trade amid hopes China will soon announce stimulus to support its economy, after the US upped its tariffs on the country to 145 per cent. Also, there was optimism over the US government's decision to suspend reciprocal tariffs for most countries for 90 days. 

Hindalco Ltd climbed 6.26 per cent to Rs 599.70. Tata Steel rose 5.11 per cent to Rs 133.70. JSW Steel gained 4.98 per cent. JSL, Coal India and Vedanta advanced 4.48 per cent, 4.27 per cent and 3.63 per cent, respectively.

SAIL, APL Apollo, Hindustan Zinc and Jindal Steel added 3.57 per cent, 3.46 per cent, 3.43 per cent and 3.38 per cent, respectively. NMDC and Nalco also gained 3 per cent and 1.4 per cent, respectively. The BSE Metals index was up 1,214.26 points, or 4.56 per cent, at 27,831.45.  

"We find steel companies better placed than aluminum due to domestic trade barriers and a likely stimulus by China in 2HCY25E to counter weaker exports. We remain cautious on the metals sector and would avoid bottom fishing. Vedanta, Hindalco and Tata Steel are most vulnerable to the global macro," Kotak Institutional Equities said.

On monetary policy, Nomura said the PBoC (Chinese central bank) might guide funding costs lower by increasing its bond purchases via outright reverse repos or direct purchases of CGBs, before cutting the RRR and policy rates. 

"We maintain our forecasts for 100bp of total RRR cuts and 30bp of total rate cuts, evenly split between Q2 and Q4. Additionally, the PBoC might intervene in forex markets to prevent a sharp RMB depreciation. On the fiscal side, we expect Beijing to speed up and increase fiscal spending to bolster domestic consumption," it said. Kotak said a declining dollar should provide a price cushion for commodity prices but potentially lower demand amid an economic slowdown would overshadow any tailwinds from currency.

Nomura expects Beijing to implement policy measures to offset the drop in exports. It maintained its 2025 GDP growth forecast of 4.5 per cent, which is below Beijing’s target of “around 5.0 per cent”.