The Nifty Metal index witnessed sharp selling pressure on Monday, June 2, plunging 1.6 percent to 9047.95, following a major announcement by US President Donald Trump to double import tariffs on steel. This move sparked concern among global exporters and rattled sentiment across the Indian metal sector.

Earlier on Friday, Trump announced his decision during a rally at a steel plant in Pennsylvania. He said that the tariff hike from 25 percent to 50 percent would take effect on Wednesday, June 4. According to Trump, this decision aims to protect the US steel and aluminium industry more aggressively.

In a subsequent social media post, Trump claimed that the steel and aluminium industries in the US are bouncing back and that this tariff would provide another big boost to American workers. His words sent shockwaves through metal-heavy indices around the world, including India.

Sharp fall in metal stocks

Following the news, Indian markets reacted negatively. The Nifty Metal index was the worst performing sectoral index, with most constituents trading in the red throughout the day.

The top loser was Lloyds Metals and Energy, which fell over 4 percent to Rs 1332.60. JSW Steel followed closely, sliding 2.44 percent to Rs 969.25.

Other major laggards included:

• Hindustan Zinc

• Vedanta

• Tata Steel

• Tech Mahindra

• HCL Tech

These stocks recorded declines between 2 percent and 4 percent, adding pressure to the broader market.

Some gainers defy the trend

Despite the sell-off, a few metal stocks bucked the trend. Companies like:

• Adani Enterprises

• National Aluminium Corporation (NALCO)

• Welspun Corporation

managed to post modest gains, providing limited support to the battered index.

Nifty Metal index recent performance

• In the past five trading sessions, the Nifty Metal index has declined 2.25 percent

• In the last one month, the index is up 7 percent, showing strong recovery trends before the tariff announcement

• Over a six-month period, the index has stayed largely flat, neither generating significant gains nor losses for investors

• However, over the last one year, investors in the metal basket have lost more than 9 percent

This mixed long-term performance signals both opportunity and risk, particularly in light of global policy shifts like the US steel tariff hike.

Why this matters

The decision by the US to double tariffs on steel has a direct impact on Indian exporters, particularly those relying heavily on international markets. The earlier hike this year to 25 percent had already disrupted exports worth around 5 billion dollars.

As per reports, Indian exporters had reached out to the Ministry of Commerce and Industry to address the impact of these protectionist measures. Now, with tariffs going up to 50 percent, further contraction in export revenues is expected.

Global context and investor sentiment

Markets across Asia also reflected the jitters caused by the announcement.

• Japan's Nikkei 225 fell 0.89 percent

• Topix dropped 0.65 percent

• South Korea's Kospi remained barely positive at 0.16 percent

• Australia's ASX 200 stayed flat

The sentiment globally is one of caution, especially for economies with large export components in metals and allied sectors.

Meanwhile, gold prices remained close to record highs, with 24-carat gold priced at Rs 95940 per 10 grams, signaling a flight to safety among investors.

Outlook

According to analysts, the market is likely to remain volatile in the short term, driven by:

• Geopolitical tensions

• Global tariff uncertainties

• Weak cues from Wall Street futures

• Sectoral rotations in domestic markets

Investors are advised to be cautious, especially when it comes to metal-heavy portfolios, and wait for policy clarity before making any fresh entries.

Conclusion

The sharp decline in stocks like Hindustan Zinc, Vedanta, and Tata Steel on Monday was a direct result of the tariff hike by the US government. As global trade tensions continue to rise, the metal sector in India may face headwinds in the near future. However, strong domestic fundamentals and growth tailwinds may cushion some of the impact if managed prudently.

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