National Aluminum Inc. rose 6.6% on Thursday. Hindalco, Lloyds Metals, and Welspun Corp rose more than 3% each, while JSW Steel and NMDC gained 2.9% and 2.4% respectively.
The Nifty metals index rose 2.3%, while the benchmark Nifty gained 1.2% on Thursday. All components of the metal index rose except the Steel Authority of India.
“Base metal prices rose after the closure of the Strait of Hormuz, indicating supply constraints,” said Jatin Trivedi, VP Research Analyst – Commodities & Currencies, LKP Securities. “Shipping through this sea route has decreased, and the situation is critical.”
InstitutionsStocks led by aluminum players up 6%; Any protest is likely to be violent and destabilizing, analysts warn
West Asia accounts for about 8% of global aluminum capacity. It relies heavily on the Strait of Hormuz for metal exports and alumina imports, with key producers including Saudi Arabia, the UAE and Bahrain, according to ING.
The shutdown of Qatar’s Qatalum aluminum mine was a major concern due to potential supply shortages. Amid the escalating conflict in West Asia, aluminum miner Bahrain, which operates the world’s largest smelter, warned buyers on Wednesday that it was holding up supply concerns, according to a Reuters report.
“This was done in 2022 during the Russo-Ukraine war when Russian mines were closed due to the war and sanctions,” Trudi said. Trivedi said. Aluminum prices rose nearly 1% on Thursday but later pared the gains to trade 0.8% lower. So far in March, the price of the base metal is up 5.2%
“Higher aluminum prices are showing better earnings and translating into better earnings for these companies, which has boosted share prices,” said Vyom Cheda, research analyst at Stuxbox. Although aluminum prices have risen in the past few sessions, investor sentiment in the past two sessions has outweighed the expected gains from higher base metal prices, Cheda said.
Over the past month, the Nifty metals index rose 1.1%, while the benchmark Nifty fell 3.4%. Trivedi said aluminum prices are expected to move in a wide range of $3100-$3500 in the near term, with a sharp turnaround expected.
“The metal stocks are expected to inch higher; however, the rally is expected to be violent and volatile,” said Trivedi, whose top picks are Hindalco and Nalco. If Tata Steel and JSW Steel fall 5-10%, they are also attractive bets, Trivedi said. In 2026, the Nifty metals index rose 7.1%, while the benchmark Nifty fell 5.3%. “The rally in metal stocks is expected to continue as demand remains strong and supply is expected to remain tight in the near term,” Cheda said. “India Zinc and Nalco are the top bets in the sector,” he said.
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