Trump Tariffs: Tata Steel, Hindalco, Vedanta Shares Drag Nifty Metal Amid Trade War Speculation

Nifty Metal Declines: The stock market witnessed a historic decline on April 4, with the Sensex crashing 3,939.68 points at the day’s low of 71,425.01 and the Nifty declining 1,160.8 points of 21,743.65. Declines dictated the day for D-street amid increasing uncertainty over how US trading partners will respond to Trump’s tariff imposition.

While all sectoral indices suffered amid the broad-based selling in the market, domestic metal sector stocks were the most impacted. The Nifty Metal index witnessed a deep decline in early trade falling over 8 per cent to hit an intraday low at 7690.2 levels.

The index continued its losing spree, having already declined over 7 per cent in the last three sessions between April 2 and April 4. In today’s trade all 15 constituents of the Nifty metals index traded in the red. Lloyds Metals And Energy Ltd and Tata Steel shares declined the most among the constituents of the index.

Earlier in the day, shares of Lloyds Metal and Energy Ltd declined over 18 per cent to hit an intraday low of Rs 1015 apiece on the NSE. Shares of Tata Steel also declined nearly 11 per cent to trade at Rs 125.33 apiece on the NSE.

Other stocks such as National Aluminium Company Ltd, JSW Steel Ltd, Hindustan Copper Ltd and Steel Authority of India Ltd also declined significantly by as much as 7.96 per cent around noon.

Aastha Mehta, Research Analyst at Green Portfolio PMS told Outlook Money that the steel manufacturing industry is likely to bear the brunt of the tariff imposition first, followed by aluminium. Mehta added that since the two metals already trade within sensitive global supply chains, any disruptions are likely to negatively impact the margins for these companies.

"The steel segment within the metal manufacturing industry is likely to bear the brunt in the mid-term first, followed by aluminium. Both steel and aluminium are heavily traded commodities and already operate in highly sensitive supply chains, so any disruption, especially from tariffs, can feed directly into costs and margins," Mehta said.

Shares of NMDC Ltd, Hindalco Industries Ltd, Jindal Steel & Power Ltd and Jindal Stainless Ltd traded lower by as much as 6.11 per cent on the NSE. Shares of Adani Enterprises Ltd, APL Apollo Tubes Ltd, Vedanta Ltd, Hindustan Zinc and Welsun Corp also declined between 1.4 per cent and 5.72 per cent during the day.

What’s Dragging Nifty Metal Index

The index was dragged lower by the declines seen in index heavyweights such as Tata Steel Ltd, JSW Steel Ltd., Hindalco Industries Ltd and Vedanta Ltd. Notably, these four stocks collectively constitute as much as 61.99 per cent weightage in the Nifty Metal index.

The decline seen in the Nifty Metal index seemed in line with the overall weakness seen on D-Street as the market factored in the impact of the reciprocal tariffs. While the US has not included metals in the sectors on which reciprocal tariffs will be imposed, it remains to be seen whether future tariffs will include the metals as well.

Earlier in March, the US imposed a 25 per cent tariff on steel and aluminium imports. Notably, the US president has hinted at tariffs on copper imports.

Mehta said that while tariffs have not been imposed on copper so far, its increasing importance in the field of green-energy is expected to increase the likelihood of tariff imposition on the metal. Notably copper is used in the production of renewable energy components like turbines, generators, transformers, inverters and electrical cables.

"Copper, on the other hand, hasn’t been in the spotlight for tariffs yet, and that’s showing in market behaviour. Copper is mostly unaffected for now, but its increasing importance in green energy could make it a target for future trade policies," Mehta noted.

Additionally, there’s uncertainty regarding the policy decisions of other US trade partners as countries such as China are likely to retaliate to US tariffs. The possibility of a potential trade war has also dulled investor sentiment.