Vedanta, Hindalco, other metal stocks rally up to 11% in one week. Should you buy or wait? Here’s what analysts say

Metal stocks have seen a significant rally recently, with the shares of Adani Enterprises, Hindalco Industries, Vedanta and others jumping up to 11% in a week and pushing the Nifty Metal index 4% higher despite overall market volatility. However, analysts advised patience, suggesting that investors should use any dip to accumulate instead of chasing the momentum blindly, while listing out stocks to buy.

The sharp rally in metal stocks was driven by multiple tailwinds. Gold and silver saw their prices soar after the government increased import duty on the precious metals to 15%, in order to stop rupee’s free fall and moderate non-essential imports during a period of heightened global uncertainty linked to the Iran-US conflict.

Additionally, US President Donald Trump’s visit to China after years of escalating geopolitical friction between the world’s two largest economies may have also supported the bulls in the metals counter. Strong earnings further boosted the market sentiment.

‘Accumulate metal stocks on dip’

The metal stocks have rallied sharply, capturing the positive momentum, said Aditya Welekar, Senior Research Analyst of Metals at Axis Direct. He said investors can consider accumulating the stocks at any pullback. “Non-ferrous metals such as aluminium and copper are finding support from supply disruptions and strong industrial demand from China. Sulphuric acid supply issue has supported copper prices. Aluminium smelters in the gulf form 9% of global supply. With around 3 million tonnes of supply in that region being impacted, aluminium prices are trading at elevated levels of $3,500/t. Steel prices are driven by strong domestic demand,” he explained.

Amarjeet Maurya, Deputy VP of Fundamental Research at Kotak Securities, highlighted that several metal stocks have delivered strong returns even as Nifty 50 corrected over 5% in the past one year. Shares of Hindustan Copper rallied over 161%, while those of Hindalco Industries jumped 70%, Hindustan Zinc rallied 52%, and more.

“Investors can consider buying at current levels, and any further correction or dip may provide an opportunity to accumulate more for the long term,” he said, adding that the medium-term outlook for the metals and mining sector remains positive, supported by strong fundamentals across steel and aluminum.

The metal space continues to offer selective opportunities, particularly in companies linked to commodities witnessing strong price momentum, said Sunny Agrawal – Head of Fundamental Research at SBI Securities.

Why shouldn’t investors chase the metals momentum blindly?

Vaqarjaved Khan, Senior Fundamental analyst at Angel One noted that the metal stocks have already seen a sharp rerating, so this is not the kind of market where investors should rush in blindly.

Among metal stocks, Amarjeet Maurya from Kotak Securities remains positive on JSW Steel and Jindal Steel from a long-term perspective. “Investors can consider buying at current levels, and any further correction or dip may provide an opportunity to accumulate more for the long term,” he said.

“After a strong rally, the risk-reward often improves only when the stock cools off and gives a better entry point. My preference would be to wait for a meaningful dip rather than chase momentum at elevated levels, because metal counters are highly cyclical and can correct quickly if global prices, demand trends, or margins soften,” according to the analyst.

Which metal stock should you buy?

However, if Khan had to choose one metal stock for a patient investor, then Tata Street would be his first pick because it offers scale, liquidity, and a relatively balanced way to participate in the cycle. “JSW Steel is also attractive for those willing to pay up for quality, while the smaller names can be far more volatile,” he added.

Sunny Agrawal from SBI Securities meanwhile said that the markets are seeing a sharp uptick in zinc and silver prices, which is positive for players such as Hindustan Zinc. Investors looking to capitalize on this move may consider adding the stock to portfolios with appropriate stop losses, as it has the potential to deliver nearly 8–10% short-term upside.

“Within steel, finished product prices have seen a meaningful rise over the last three to four months, creating a favourable earnings environment for companies like Tata Steel and SAIL,” he said, adding that copper is another segment drawing attention, with global prices hovering near multi-year highs of around $14,000 per tonne. “In the Indian market, Hindustan Copper remains one of the key listed plays. While valuations appear somewhat elevated, the ongoing strength in copper prices could continue to support the stock, with a potential upside of 8–10% in the near term, subject to disciplined stop-loss levels,” he explained.

Agrawal highlighted that investors must remember that metals remain cyclical in nature. Any correction in underlying commodity prices could lead to sharp pullbacks in these stocks, making risk management and strict stop-loss adherence critical, he added.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)