Here are the five key forces driving the rally, and what they could mean for investors betting on the next leg of the metal cycle.
1. Global metal prices are on fire
Hindalco and Vedanta gained up to 2% on Tuesday as global metal prices extended their climb. Copper has surged above $10,600 per tonne, aluminium is firm near $2,850, and iron ore remains buoyant, supported by a weaker dollar and tightening supplies.“The Nifty Metal index’s rally is underpinned by a perfect confluence of global and domestic tailwinds,” said Harshal Dasani, Business Head, INVasset PMS. “China’s renewed export restrictions on rare earth minerals have created a scarcity premium, boosting the strategic metal complex globally.”
2. Foreign flows and Fed rate cut bets add fuel
Foreign investors have turned net buyers in October, reversing months of risk aversion. “FIIs are clearly rotating toward cyclicals, with metals drawing renewed inflows after months of defensiveness,” Dasani said.Dasani said that “the softening dollar and increasing probability of Fed rate cuts have encouraged global allocators to reprice risk in favour of commodities and emerging-market equities.”Abhinav Tiwari, Research Analyst at Bonanza, noted that expectations of another 25 bps Fed cut later this year “are boosting risk appetite and demand for non-yielding assets like metals.”
3. Domestic demand and policy tailwinds strengthen the case
India’s steel demand remains resilient, growing at high single digits even as global manufacturing slows. “Steel demand in India is expected to be relatively stronger and grow by high single digits in FY26/27E,” said Prashanth Kumar Kota, CFA, Lead Analyst, Basic Materials at Choice Broking.
Kota said that the 11–12% safeguard duty “would protect pricing and profitability for Indian steel mills.”
Vedanta’s recent Rs 1 lakh crore investment announcement in Odisha, including new aluminium parks and a ferro-alloys plant, added to the positive sentiment.
4. Brokerage upgrades and company triggers
Among individual stocks, Tata Steel led attention after Motilal Oswal upgraded it to “Buy” from “Neutral,” with a revised target of Rs 210 — implying a 19% upside from its last close of Rs 177. The brokerage cited improved realisations, cost efficiencies, and stronger domestic demand.
Meanwhile, Hindalco’s stock continues to ride a wave of optimism linked to rising copper prices, which have hit a 16-month high.
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5. Technical breakouts signal bulls in control
“The Nifty Metal Index has formed a strong bullish price structure, resembling an inverse head and shoulders pattern,” said Drumil Vithlani, Technical Analyst at Bonanza. “A confirmed breakout above 10,100 now establishes this level as a key support area. The next resistance zones are positioned around 10,800 and 11,000.”
Vithlani added that Tata Steel is “approaching a breakout on the monthly timeframe, supported by rising volumes,” with support around Rs 166 and near-term targets at Rs 190 and Rs 195.
Hardik Matalia, Derivative Analyst at Choice Broking, noted that the index “is comfortably trading above its 20-day, 50-day, and 200-day EMAs,” and that “sustained strength above 10,500 could open the path for 11,000.”
SAIL is currently displaying a constructive setup on the weekly chart, maintaining its position above key moving averages — a sign of sustained strength and accumulation at support levels, Matalia said, adding that a sustained move above these levels could trigger a fresh breakout, opening the door for a medium-term upside target of Rs 145–Rs 150.
“Going forward, the immediate support levels are seen at 10,100 and 10,000, while on the upside, the next resistance and target zones are positioned around 10,800 and 11,000. This setup suggests a continuation of the ongoing upward momentum, supported by a solid base formation and renewed buying interest across the metal space,” Vithlani said about the metal index.
Outlook: Momentum With a Hint of Caution
Dasani said the ongoing rally “is not just cyclical but anchored in improving earnings visibility and capacity expansion,” though he cautioned that “mild overbought conditions and resistance zones could prompt short-term profit-taking.”
“Volume patterns suggest the rally is fundamentally backed rather than purely speculative,” he added, pointing to delivery-based buying and rising open interest as healthy signs.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)