As investors increasingly anticipate that the US Federal Reserve will announce a rate drop following the end of its FOMC meeting later today, the shares of metal businesses increased in trade on December 10.
A US rate decrease would lower borrowing rates for international investors, enticing them to put money into India’s faster-growing markets. Metal stockpiles rise as a result.
As of 11.15 am, the Nifty Metal index had broken its two-day losing run, rising to 10,198.35. As of right now, it is the market’s leading sectoral index.
Growing expectations for a rate cut:
According to the CME’s FedWatch Tool, traders are currently pricing in an 89 percent possibility of a 25-basis-point rate drop on Wednesday. Fed Governor Christopher Waller stated earlier in November that there should be another quarter-point rate decrease this year due to the weakness of the US labor market.
Interest rates may decline “in the near term,” according to New York Fed President John Williams, who is also vice chair of the Federal Open Market Committee and a permanent voting on rate policy. “I consider monetary policy to be somewhat restrictive. In order to get the policy stance closer to the neutral range, I still think there is potential for a future adjustment to the target range for the federal funds rate,” Williams stated.
Data indicating a modest improvement in US consumer expenditure around the close of the third quarter further cemented expectations for a rate decrease this time. Investors, meanwhile, are still awaiting hints about potential policy changes from the anticipated most split Fed in recent memory.
As doubts grow that current Fed Chair Jerome Powell’s successor, Kevin Hassett, would be as dovish as US President Donald Trump had anticipated, investors are already lowering their expectations of rate reduction in 2026. May marks the conclusion of Jerome Powell’s eight-year tenure as Fed head.
Silver reaches all-time highs:
On December 10, silver reached fresh all-time highs. Silver futures with a March expiration date increased by almost 1.5% to reach a new all-time high of Rs 1,90,799 per kilogram. For the first time ever, future contracts with a May expiration date reached Rs 1,93,299 per kg.
For the first time, spot silver prices surpassed $60 and remained close to $61 per ounce, representing a 32 percent increase over the previous day.
The industrial use of silver, worldwide supply limitations, and investment demand have all contributed to the silver price’s recent surge to a record high. Silver has fared better than gold, and more investors are choosing silver, according to Aksha Kamboj, Executive Chairperson of Aspect Global Ventures and Vice President of the India Bullion & Jewellers Association (IBJA).
How should investors proceed?
According to Naren Agarwal, CEO of Wealth1, investors are now more concerned with anchoring on balance sheets, capacity utilization, and long-term demand clarity in steel, aluminum, and base-metals supply cycles than they are with chasing rapid rebounds.
According to Aman Gupta, Director of RPS Group, “stable global base-metal pricing and supply restrictions in foreign nations are giving Indian metal producers a powerful breath of fresh air.” “It might be an opportunity for investors to reexamine the cyclical industries that have been severely affected, so if they plan ahead and choose their stocks carefully, they could profit,” he continued.
“Niche metal companies have outperformed major players, which are mostly in steel and aluminum, and metal stocks have increased since last year. Tariffs had an effect on margins even if the currency devaluation was beneficial, according to Shravan Shetty, Managing Director of Primus Partners.
Today’s top metal gainers:
As silver reached new all-time highs on growing expectations for a rate decrease by the US Federal Reserve, Hindustan Zinc shares were the top gainers on the index, climbing around 5%. The shares of Hindalco Industries, Vedanta, and Jindal Stainless Steel all increased by around 2%.
those of Welspun Corp., APL Apollo Tubes, Adani Enterprises, and NMDC were trading in the green with little gains, while those of Tata Steel, Jindal Steel & Power, and Hindustan Copper increased by about 1% apiece.
Shares of JSW Steel, Steel Authority of India (SAIL), and National Aluminium Company (NALCO) were trading in the red with slight losses, defying the trend.
