Nifty Metal index records best single-day gain in 2 months. What’s behind the rally?

Indian metal stocks witnessed strong buying interest in the trading session on Wednesday, March 5, as China—the world’s largest producer and consumer of base metals—maintained confidence in its economy by keeping its 2025 growth target at 5%, the same as the previous year. 

Additionally, China announced stimulus measures to boost growth amid escalating trade tensions with the U.S., fueling hopes that metal prices will remain resilient and that the demand will stay strong.

Against this backdrop, the Nifty Metal index gained 3% in today’s intraday trade to reach 8,600, marking its biggest single-day gain since January 14. 

All 15 constituents of the index traded in the green, with Hindustan Copper leading the rally, spiking by 5.2%, followed by Welspun Corp, Jindal Stainless, Adani Enterprises, APL Apollo Tubes, Vedanta, and Tata Steel, which rose over 3%.

Other metal stocks, including NALCO, SAIL, JSW Steel, NMDC, Hindalco Industries, Jindal Steel & Power, Hindustan Zinc, and Ratnamani Metals & Tubes, gained between 1% and 2.7%.

The world’s second-largest economy, on Wednesday, set its GDP growth target for 2025 at around 5%, as the country’s top legislative body held its annual meeting.

Beijing also announced a rare hike in fiscal funding, allowing its budget deficit to reach four per cent this year as it battles stuttering employment for young people, stubbornly low consumer demand, and a persistent property sector debt crisis. The 4% deficit would mark the highest on record since 2010. The previous high was 3.6% in 2020, according to recent media reports.

At the Wednesday opening of the annual meeting of China’s top legislature, the National People’s Congress, Premier Li Qiang stated that all parties should work hard to achieve the “very challenging” goal, given an “increasingly complex” external environment.

Beijing has been implementing several monetary and fiscal measures, including interest rate cuts and the unification of minimum down payments for home loans, aimed at revitalizing the property market, leading to a rebound in the economy in 2024.

In late September 2024, the country unveiled its biggest stimulus package since the pandemic, which attracted investor interest as these measures were expected to help stabilize the economy.

Earlier, speculation had risen that China might introduce additional stimulus measures to support growth after Donald Trump imposed sanctions on Chinese imports to the U.S.

China strikes back

China on Tuesday announced that it will impose retaliatory tariffs on U.S. goods. According to an official statement, additional tariffs of up to 15% will be imposed on key U.S. farm products, including chicken, pork, soy, and beef. The new tariffs will take effect on March 10.

The move comes after Donald Trump ordered tariffs on imports of Chinese products to be raised to 20% across the board. Those tariffs took effect on Tuesday.

Following the first round of new U.S. tariffs in February, China’s retaliatory measures included raising duties on certain U.S. energy imports and placing two U.S. companies on an “unreliable entities” list, restricting their ability to do business in the Asian country.

U.S. tariffs are expected to impact hundreds of billions of dollars in total trade between the world’s two largest economies.

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