Vedanta, Vedanta Aluminium, NALCO, other metal stocks fall up to 5% on Friday. Here’s why

Shares of metal companies, including Vedanta, Vedanta Aluminium, Hindustan Copper, Tata Steel and NALCO, among others declined up to 5% on Friday amid pressure from soaring oil prices, rising bond yields and a stronger US dollar.

In today’s session, Vedanta shares fell over 4% to Rs 257, while Vedanta Aluminium slipped 4% to trade at Rs 420 per share on the BSE. NALCO declined 5% to hit a low of Rs 352, while state-owned Hindustan Copper fell over 4%. Tata Steel and JSW Steel declined 3% each.

The yield on the US 10-year Treasury bond climbed above 4.9%, its highest level since 2023, as rising oil prices fuelled inflation concerns and markets braced for a prolonged war. The move also strengthened expectations of a potential US Federal Reserve rate hike at its meeting next week.


Meanwhile, the US 30-year Treasury yield rose to 5.378%, its highest level since 2007. The European Central Bank also raised rates, citing higher inflation risks alongside weaker growth.

Rising bond yields, soaring oil prices and a stronger dollar can create a particularly difficult environment for metal stocks because they simultaneously pressure commodity demand, input costs and profitability.

Elevated oil prices raise transportation, freight and energy costs across mining and metal production, putting pressure on margins, particularly when companies are unable to fully pass on higher costs through selling prices.

A stronger dollar can add another layer of pressure because metals such as aluminium, copper and steel are globally traded and largely priced in dollars. A stronger dollar can make these commodities more expensive for buyers using other currencies, potentially weakening demand and putting downward pressure on international metal prices.

Oil price rockets above $110

Oil prices rose again on Friday to $110 per barrel, with both major benchmarks on track to finish the week above $100 for the first time since mid-May. This rise occurred as increased attacks along key Middle East shipping routes heightened concerns about a prolonged disruption to oil supplies.

For the week, the two benchmarks were up nearly 13%, putting them on course for their strongest weekly gain since the week ended July 17.

The risks for oil prices are increasingly tilted to the upside as the possibility of further disruption grows. Daan Struyven, co-head of global commodities research at Goldman Sachs, said the attacks in recent days suggested that shipping disruptions could spread and become more severe.

Goldman Sachs has outlined a scenario in which oil prices could rise to as much as $120 a barrel if attacks on Middle Eastern vessels intensify. If exports return to normal, however, the bank expects oil prices to move back towards $80 a barrel. Struyven told Bloomberg that risks to shipping had become an important driver for oil prices.

US Fed rate hike bets increase

Attention now turns to the US inflation report due later in the day, with investors closely watching the data for clues on the Federal Reserve’s future interest-rate trajectory.

Data released on Thursday showed that the Producer Price Index (PPI) for final demand rose 0.4% in August, following an upwardly revised 0.1% increase in July. The hotter-than-expected producer inflation reading prompted traders to raise their bets that the Fed could hike interest rates at its meeting next week. CME FedWatch data shows that over 70% of traders are now factoring a rate hike next week.

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