Indian Metal Stocks Surge Up to 7% Amid Crude Oil Price Drop

Shares of metal and mining companies surged up to 7 per cent on Friday, March 20, as market sentiment improved following a drop in crude oil prices. The decline came after leading European nations and Japan offered to help secure safe passage for ships through the Strait of Hormuz, while the US announced measures to boost oil supply.Benchmark indices, Sensex and Nifty, recovered 1 per cent each on Friday after plunging 3.3 per cent in the previous session, marking their worst day since June 2024.The Nifty Metal index gained nearly 3 per cent to hit an intraday high of 11,583.2 levels. Around 10:00 AM, the sectoral benchmark was trading at 11,499.25 levels, up 2.22 per cent from the previous session's close of 11,249.35.Excluding National Aluminium, 14 of 15 index constituents rose on Friday, with Lloyds Metals & Energy, Tata Steel, JSW Steel, Jindal Steel, and APL Apollo Tubes gaining over 3 per cent each. Hindustan Zinc, NMDC, Vedanta, Steel Authority of India, and Hindustan Copper advanced more than 2 per cent, while Adani Enterprises, Welspun Corp, Jindal Stainless, and Hindalco rose up to 2 per cent.ALSO READ:Vibhor Steel Tubes gains after bagging Rs 17-cr order from Agrawal InfracabAlso ReadBHEL rallies 5%, Tata Power hits 52-week high; what's driving power stocks?OMC stocks rally on softer crude; HPCL, IOC, BPCL shares gain up to 5%Indian Rupee falls past 93/$ on crude volatility amid West Asia tensionsNifty PSU Bank index soars over 3%; Canara, UBI, BOI rally up to 5%Aequs shares rise 2% in trade; JM Financial sees more 15% upsideHere's why metal stocks are rallying today:According to media reports, global brokerage Macquarie views the 7-13 per cent correction in Indian metal stocks since late February as an attractive buying opportunity, despite weakness in global markets. The brokerage expects domestic steel price hikes of ₹2,000-3,000 per tonne to support earnings, while demand remains relatively resilient. Indian steel companies are better insulated than their global peers due to strong local demand dynamics, the brokerage said.Macquarie said improving steel spreads are a key positive for the sector, with domestic spreads expected to average $250 per tonne in Q4FY26, down from around $310 in December and about $340 for FY26 so far. Ebitda per tonne could rise ₹1,500 sequentially, supporting near-term profitability, while stable trends in China and firm global steel prices add to a constructive outlook, according to reports.The brokerage has maintained an 'Outperform' rating on Tata Steel, JSW Steel, and Jindal Steel, while Hindalco and Coal India are rated 'Neutral'. It has JSW Steel as its top pick, with a target price of ₹1,319, implying about 16 per cent upside. It has set a target price of ₹222 for Tata Steel and ₹1,193 for Jindal Steel. For Coal India, the target is ₹445, while Hindalco’s target is ₹979, reflecting a modest 9 per cent upside.ALSO READ:Sell Gold with tight stop-loss as bears eye $4,400 support: AnalystAdditionally, analysts believe that recent signals from the US and Israel indicating a possible de-escalation in the Iran conflict have brought some relief to global markets. This has led to a mild cooling in crude oil prices.According to Ponmudi R, chief executive officer at Enrich Money, indications that Israel may avoid targeting Iran’s critical energy infrastructure have eased immediate fears of supply disruptions. This has reduced the extreme risk premium in oil and is also reflected in gold prices, which are heading toward one of their sharpest weekly declines, suggesting that expectations of aggressive rate cuts are fading.However, the broader environment continues to remain uncertain. Overall, the market remains highly event-driven, he added.