Metals stocks are surging, with the Nifty Metal index as the top sectoral gainer on Thursday. Heavy buying is evident across the sector, with Hindustan Copper and Zin shares surging over 5%, NMDC, SAIL & Lloyds Metals gaining 4%, and JSW Steel and Tata Steel rising 2%. 

Hindustan Copper hit a fresh 52-week high as global copper prices surged to a record high. Additionally, concerns about rising supply from major copper mines, such as Freeport's Grasberg mine in Indonesia, added to the sentiment. News reports suggest that it may not resume operations until mid-2026. Other global mine disruptions and declining ore grades are expected to maintain tight supply conditions through 2027. 

Investors are also tracking minutes from the US Federal Reserve's meeting, which showed a likelihood of interest rate cuts later this year. This augurs well for assets like metals, as a rate cut in the US could reduce borrowing costs for foreign investors, encouraging them to invest in higher-growth markets such as India.

In another trigger for the sector, the European Commission proposed cutting steel import quotas earlier this week to support EU steelmakers. 

All Eyes On Q2 Earnings Season

With the September quarter earnings season approaching, brokerage firm JM Financial estimates that operating profits across metals will decline by nearly 6% compared to the previous quarter, driven by lower realizations. They expect Indian ferrous players to witness an EBITDA/tn contraction in Q2, while non-ferrous players may witness margin expansion. Hindalco and Tata Steel remain their top picks in the metals space.

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