Metal Stocks – Best Metal Industry Stocks to Buy in India 2023 for Your Portfolio

India has a long-standing history of metal mining and production, as the industry plays a vital role in the country’s economy. As a fast-developing country that aims to become a 5-trillion economy in the next few years, the Iron and Steel industry contributes 2% of GDP and its weight in the Index of Industrial Production (IIP) is 6.2%. Being one of the biggest contributors to India’s GDP, the mining and metal industries are fundamental to the Prime Minister’s goal of making India an Aatmanirbhar Bharat. Thus, the industry has seen significant growth over the years & fluctuation in ferro alloys share prices, making metal stocks in India an attractive investment opportunity for those interested in the Indian stock market.

In this blog, we’ll look closer at the metal stocks in India and what makes them a worthy investment.

What are Metal Stocks in India?

Metal stocks refer to the stocks of companies involved in the exploration, production,  processing or distribution of metals such as steel, aluminum, copper, zinc, and others. In India, several metal sector stocks are listed on major stock exchanges- the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

These metal sector shares may operate mines, smelters, refineries, or other facilities involved in the extraction and processing of metals. The best metal stocks in India can provide exposure to the performance of the metal industries, and investors often use them to gain exposure to commodities without having to own and store the metal physically.

Top 10 Metal Stocks in India

Here is the metal sector stocks list consisting of 10 best metal stocks in India based on the market capitalization in the share market.

Note: The data is from 3rd September, 2023. However, for real-time updates on stock prices and market trends, visit smallcase stocks collection today!

What is the Nifty Metal Index?

The Metal Nifty or Nifty Metal Index is a stock market index that represents the performance of metal and mining companies listed on the National Stock Exchange (NSE) in India. It is one of the sectoral indices created and maintained by the NSE, which tracks the performance of a particular sector of the economy.

Historically, this index has been volatile since its launch in 2004. Then the base value of the index was 1000. After several crests and troughs, in keeping with the market conditions, this index has seen recovery. From its pandemic-induced low of 1778 in March ’20, it currently holds a value of 3500. 

The Nifty Metal Index comprises 15 companies. These companies are involved in producing and distributing metals such as steel, aluminium, copper, zinc, and others. The index is calculated using the free-float market capitalization method. This method considers the shares available for trading in the market are not held by promoters, governments, or other strategic investors.

Global commodity prices, demand and supply dynamics, government policies, and economic conditions all influence the performance of the Nifty Metal Index. By investing in nifty metal stocks, you can track the index’s performance and invest in exchange-traded funds (ETFs).

Metal Industry in India 

India is home to a rich variety of minerals, making it one of the top producers of metals in the world. 

The country is the third-largest producer of steel, with a capacity of 142.3 million tonnes per annum (MTPA), and the fourth-largest producer of aluminium, with a capacity of 4.1 MTPA.

The metal industry in India is divided into two categories, namely ferrous and non-ferrous metals. Ferrous metals include iron and steel, while non-ferrous metals include copper, zinc, lead, and aluminium, among others. The industry has been a crucial contributor to the Indian economy, generating employment and revenue for the country. Thus, you can keep a keen eye on ferrous alloy share prices of the top metal industries to make your investment decision.

Best Metal Stocks – Overview

Let’s have a look the best Indian metal companies in India.

Coal India Ltd

Incorporated in 1973, Coal India Ltd.(CIL) is the largest government-owned-coal-producer in the world. This metal business produces coal and related products and is one of the largest coal producers in the world. Thus, the company operates in over eight states of India and operates through 85 mining areas.

• Low Risk: Stock is 1.96x as volatile as Nifty
• Largecap: With a market cap of ₹1,45,995 cr, the stock is ranked 38

Hindustan Zinc Ltd

Hindustan Zinc Ltd (HZL) is an Indian mining company that was founded in 1966. The company produces zinc, lead, and silver and operates in India. Additionally, HZL is India’s only and the world’s largest integrated producer of Zinc-Lead. It is a subsidiary of Vedanta Limited.

• Moderate Risk: Stock is 2.37x as volatile as Nifty
• Largecap: With a market cap of ₹1,35,083 cr, the stock is ranked 41

 NDMC Ltd

NMDC Ltd, or National Mineral Development Corporation Limited, is a leading public sector enterprise in India. Involved in the exploration and mining of iron ore, copper, and limestone. Established in 1958, NMDC has been pivotal in India’s mineral resource advancement and maintains a robust presence in both domestic and global markets.

• High Risk: Stock is 3.12x as volatile as Nifty
• Midcap: With a market cap of ₹38,244 cr, the stock is ranked 160

How to Invest in Metal Sector Stocks?

Investing in metals gives you a few options. You can buy individual stocks of metal-related companies, like mining or manufacturing firms, for a direct stake in their performance. If you prefer diversification, there are ETFs and mutual funds tailored to the metal sector. 

These spread your risk across multiple companies. Those who feel a bit more adventurous can choose to dabble in commodity futures or options contracts tied to metal prices. And if you like having something tangible, consider buying physical precious metals like gold or silver coins. They can act as a hedge against economic uncertainty. Your choice depends on your investment goals and how much risk you’re comfortable with.

Factors to Consider Before Investing in Metal Shares

Investing in the metal share list of metal stocks India can be profitable, but checking metal share prices every time isn’t enough. There are several other factors you should consider. Here are some key factors to consider before investing in metal shares:

• Global Economic Conditions: Global economic conditions significantly impact metal prices. Economic growth can lead to increased demand for metals. While economic downturns can lead to a decrease in demand, affecting the prices of metal stocks.

• Supply and Demand Dynamics: The supply and demand dynamics of the metal market play a critical role. It determines the prices of metal company stocks. Supply shortages or excess supply can significantly impact the prices of metals.

• Government Policies and Regulations: Government policies and regulations can significantly impact the metal market. Changes in rules or policies related to trade, taxes, or environmental issues can affect the production and prices of metal stocks.

• Industry-Specific Factors: Factors specific to the metal industry, such as technological advancements, production costs, and labour issues, can impact the prices of metal stocks. Investors should stay informed about these industry-specific factors to make informed investment decisions.

Benefits of Investing in Metal Stocks List in India

There are multiple benefits of investing in metal industries in India. Thus, let’s have a look at some metal stocks prominent ones:

• Diversification of Portfolio:  Practicing portfolio investing in metal stocks can help in portfolio diversification. Thus, metal stocks in India can provide an opportunity to invest in different asset classes and help reduce the portfolio’s overall risk.

• Potential for Long-Term Growth: Metals are essential raw materials used in various industries such as construction, manufacturing, and transportation. Thus, the demand for metal stocks in India is expected to increase in the long term.

• Hedge Against Inflation: Metal stocks in India can act as a hedge against inflation. When inflation rises, the prices of metals also tend to rise, as well, which metals can help protect the value of your portfolio.

• High Dividend Yields: Metal stocks often offer high dividend yields. This can provide you with a regular income stream and be particularly attractive for income-seeking investors.

Consider Mitigating Challenges with Metal Tracker smallcase. 

Here, we have listed two primary challenges of investing in metal stocks in India. 

• Picking Out Individual Metal Companies: Investing in metal companies requires a careful selection of individual companies. Therefore, investors must conduct thorough research and analysis to identify companies with strong financials. It can be challenging for investors to pick out the best metal stocks to buy in the highly competitive metal business.

• Volatility and Fluctuations in Metal Prices: One of the biggest challenges of investing in metal companies India is the volatility and price fluctuations. The prices of metals can be highly volatile and fluctuate due to various factors. It includes changes in demand and supply, global economic conditions, geopolitical factors, and currency fluctuations. Thus, these price fluctuations can significantly impact the profitability of metal companies.

Metal Tracker Smallcase

We understand how daunting the task of selecting the best metal companies can be. Luckily, you don’t need to select and track individual metal companies to understand how the metal industry market is working. Yes, it’s possible with Metal Tracker smallcase.

The Metal Tracker smallcase by Windmill Capital is a smallcase that includes companies primarily engaged in aluminium, copper, manganese, iron & steel. These companies are pre-packaged and monitored by SEBI-registered professionals, who conduct detailed research, so you don’t have to. Through smallcase, you can invest in companies with strong environmental, social, and governance (ESG) practices

The list doesn’t end here. At smallcase, you can diversify your portfolio by doing portfolio investing. This means you can invest in several companies at the same time to mitigate risks and enjoy favourable returns.

Metal Tracker smallcase by Windmill Capital

To Wrap It Up…

To conclude, the future of metal stocks in India looks promising. Investing in metal sector stocks or nifty metal index can offer significant potential for long-term growth, portfolio diversification, and protection against inflation. However, it is important to consider factors such as global economic conditions, supply and demand dynamics, government policies and regulations, and industry-specific factors before making investment decisions.

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