Once among 2025’s standout performers, metal stocks have seen some of their sheen fade this year — a trend seemingly tied to the Iran–Israel/US tensions — with the sector slipping up to 15% since the crisis erupted on February 27. Traditionally cyclical, metals remain relatively resilient but are still exposed to a deeper correction amid a tough macro backdrop and valuations at 20-year highs.

APL Apollo Tubes is the top loser in the Nifty Metal index, sliding over 15% since the outbreak of the conflict. The next big losers with double-digit falls are Steel Authority of India (SAIL), Tata Steel and Hindustan Zinc. Meanwhile, JSW Steel, Jindal Steel, Adani Enterprises, Jindal Stainless, Lloyds Metals & Energy, NMDC, Vedanta and Hindalco Industries are down between 10% and 0.5%.

The only outlier is National Aluminium Company (NALCO), whose shares are up 5% in the same period.

Into its third week, the possibility of a truce remains elusive, with Iran laying down conditions to end the war, which in its view was engineered by Israel and the US. The Strait of Hormuz, a 21-mile-wide waterway, is now under Iran’s control. A critical passage for global energy supply, it accounts for the transportation of 20% of the world’s oil and ⁠liquefied natural gas flows.

Its closure has already begun to impact energy prices, stoking fears of a spike in inflation. The disruption is likely to adversely impact the global economy and push back expected rate cuts by the US Federal Reserve. The Central Bank will announce its policy decisions later today, where it is expected to hold the rates.

The war has started at a time when AI-led fears and tariff uncertainty have hit the domestic stock markets. Global risk-off could hurt Indian equities, said Nuvama Institutional Equities in a note. It has downgraded the sector to ‘Underweight’, as 20-year high valuations leave no room for error.

Metals are now among expensive cyclicals, joining autos, PSU banks, industrials, powers and NBFCs, the note said. Also read: QSR stocks slump up to 47% as weak investor appetite, rising fuel risks dent mood. Time to bottom fish?

Valuation worries

The post-COVID years have rewarded metal investors handsomely, with the Nifty Metal index delivering 70% annual growth in 2021, best in the last five years. Despite Donald Trump’s tariff tantrums, 2025 turned out to be the next best year with 29% returns. Hindustan Copper and NALCO were multibaggers as base metal prices took flight.

With the exception of 2024 (8.4% annual returns), the index gained up to 22% in the rest of the years.

Metal stocks have shown more resilience versus their sectoral rivals in 2026. While the Nifty Metal index is up by over 3% yera-to-date, Nifty is down 10%. Nifty Bank, Nifty FMCG, Nifty Realty and Nifty IT are down between 8% and 23% in the said period. Meanwhile, Nifty PSU Bank (0.75%) and Nifty Pharma (0.16%) are flat.

Centrum Broking pointed to the mixed picture of global metals markets in February, with global steel production hit YoY by China’s weakness, while India and the rest of the world (ROW) held firm. The non-ferrous prices too showed an uneven trend, with zinc extending MoM gains while copper consolidated at elevated levels. Aluminium, lead, and nickel saw mild corrections.

Also read: ONGC, Oil India shares outperform sector with double-digit gains in 2026. Will Iran-Israel crisis fuel more upside?

What should investors do?

Centrum has a ‘Buy’ view on select stocks like JSW Steel (TP: Rs 1,294), Tata Steel (TP: Rs 218), Jindal Stainless (TP: Rs 861) and Ratnamani Metals & Tubes (TP: Rs 2,477). It remains neutral on Jindal Stainless, Hindalco Industries, NMDC and Ratnamani Metals.

(Data Inputs by Ritesh Presswala)

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)