Nalco, Vedanta Aluminium, To Hindalco: Metal Stocks Crash Continues! Brokerage Says 'Sell Aluminium Names'

Metal Stocks Crash: Shares of metal stocks such as Hindalco, National Aluminium Company Limited, Vedanta Aluminium, and Vedanta Limited continued to face heavy selling pressure on Thursday after witnessing a steep price correction since the beginning of the week.

The weakness comes amid a steep correction in aluminium prices, prompting a brokerage to issue a bearish call on the sector and advise investors to "sell all aluminium names."
Vedanta Aluminium Metal share price today was trading 4.13% lower at Rs 444 per share on NSE at 1:35 pm. Vedanta Limited's share price was down 2.75% at Rs 274.95 per share. Hindalco scrip was trading 1.6% lower at Rs 960.5 per share, and NALCO stock was down 3.2% at Rs 337.5 per share.

Why Are Metal Stocks Falling Today?

Metal stocks are underperforming today due to weaker commodity prices, sell-off in the precious metals, especially silver, a strong US Dollar and hawkish Fed stance.

Describing the decline as an "underperformance" rather than a "crash," Nitant Darekar, Research Analyst at Bonanza, noted, " A sell-off in precious metals, especially silver, on a stronger US dollar and a hawkish Fed stance has triggered selling in the space, with Nifty Metal constituents falling up to 3% and NALCO, Vedanta and Hindustan Zinc leading the losers-even as the Nifty50 traded up 0.69% near 24,187 by late morning. This extends June's profit-taking: the index has shed over 4% this month after a 20%-plus CY26 rally."

The recent decline is a healthy consolidation and not a structural breakdown, Nitant Darekar added.

Expert Take On Non-Ferrous Segment

However, experts are divided on the non-ferrous segment. Earlier, many experts were bullish on aluminium prices and growth outlook for names like Hindalco and NALCO. But the "aluminium bull-case scenario" is being built on wrong framework, highlighted InCred Equities in its report.

"Investors continue to analyse aluminium through the lens of primary metal, where supply looks tight because China is close to its 45 mtpa capacity cap and Rest of World (RoW) supply was disrupted by the Middle East conflict. However, aluminium is not a consumed commodity like crude oil or coal; it is an above-ground circular metal. Nearly 1.5bnt (bn tonne) of aluminium remains available above the ground, and almost 80% of all aluminium ever produced is still part of the usable metal pool," read the InCred Equities report released on Thursday.

NALCO, Hindalco To Face 41% Downside Risk

The brokerage hinted at 41% downside risk for pure aluminium stocks like NALCO and Hindalco. It also indicated that Vedanta Aluminium could face headwinds under the current market conditions, although it did not assign any formal rating or target price to the company.

NALCO, Hindalco Share Price Recommendation

The brokerage gave a 'reduce' call for both the aluminium stocks and hinted at a 30%-40% downside risk. For NALCO, the brokerage noted, "This looks expensive at a time when aluminium prices are likely to fall by nearly US$800/t. In this scenario, EBITDA would fall to around US$700m, implying current valuation at ~9x EV/EBITDA; REDUCE."
Citing the expensive valuation of Hindalco at a time when aluminium prices are likely to fall by nearly US$800/t, InCred noted, "EBITDA would fall to around US$3bn, implying current valuation at ~10x EV/EBITDA; REDUCE."

Nifty Metal Outlook

Nifty Metal Index has cooled significantly from its highs and finds robust structural support within the 12,300-12,400 zone, which leaves its primary long-term uptrend entirely intact, highlighted Nishchal Jain, Quant Researcher, Share.Market by PhonePe.

"While corporate margins may face brief pressure from elevated operational costs over the next quarter, India's aggressive infrastructure spending and global green energy transitions ensure a highly resilient long-term demand floor," added Jain.