Metal Stocks Hammered as Trump Tariff Threat Roils Dalal Street

Indian metal stocks plummeted on Monday, June 2, 2025, dragging the benchmark Nifty Metal index significantly lower, after former US President Donald Trump announced a potential doubling of import tariffs on steel and aluminum to 50%, sparking widespread fears of renewed global trade tensions and severely impacting Indian metal exporters.

The start of June brought a chilling wave of uncertainty to Dalal Street, particularly for the metals sector. The primary catalyst was a statement attributed to former US President Donald Trump, indicating a drastic hike in import duties on steel and aluminum to 50%, reportedly to be effective from June 4, 2025. This news sent shivers down the spines of investors, reminiscent of the trade war era that previously disrupted global markets.

The Catalyst: Trump’s Tariff Volley

Reports circulating on Monday morning detailed that Mr. Trump, a prominent figure in US politics, had warned of a substantial increase in tariffs on imported steel and aluminum. [2, 4 (search 3), 5 (search 3)] The proposed hike would see duties double from the existing levels to a steep 50%. This aggressive stance immediately raised concerns about the potential for a new round of trade disputes, with Indian metal exporters finding themselves in the direct line of fire.

The announcement acted as a significant headwind, overshadowing some positive domestic cues like strong Q4 GDP data. The primary concern for India is the impact on its steel and aluminum exports to the US, a key market for several domestic producers. Such a sharp rise in tariffs could render Indian exports uncompetitive, severely denting revenues and profit margins.

Carnage on Dalal Street: Metal Stocks Tumble

The reaction in the Indian stock markets was swift and brutal for metal companies. The Nifty Metal index was one of the worst-hit sectoral indices on the National Stock Exchange (NSE).

In early trade, the Nifty Metal index plunged by as much as 1.6%. [1 (search 2)] According to market data available around 1:00 PM IST, the Nifty Metal index was trading lower by approximately 0.95% to 1.4%. [4 (search 1), 4 (search 3)] It’s important to note these are intraday figures, and final closing numbers post 3:30 PM IST could vary.

Several heavyweight metal stocks bore the brunt of the sell-off:

• Tata Steel Ltd. shares were reported to be down by around 2% in intraday trade. [2 (search 2)]
• JSW Steel Ltd. also saw significant selling pressure, with its stock price declining notably. [1 (search 2)]
• Vedanta Ltd. was among the top laggards in the metal pack. [1 (search 2)]
• Hindalco Industries Ltd. shares also dropped by approximately 2% during the session. [2 (search 2)]
• Other prominent losers included Steel Authority of India Ltd. (SAIL), Lloyds Metals & Energy Ltd., Welspun Corp Ltd., and NMDC Ltd., with many of these stocks trading with cuts of up to 2% during the day. [1 (search 2), 4 (search 1)]

Fourteen out of the fifteen constituents of the Nifty Metal index were reported to have opened in the red, underscoring the broad-based negative sentiment within the sector. [1 (search 2)]

Broader Market Tremors

The tariff concerns were not confined to the metals sector alone; they contributed to a generally cautious and negative mood across the broader market. Indian equity benchmark indices, the BSE Sensex and NSE Nifty 50, opened lower on Monday.

At around 1:00 PM IST, the BSE Sensex was trading at 81,258, down by 193 points (or 0.24%), while the NSE Nifty 50 was at 24,689, down by 61 points (or 0.25%). [4 (search 1)] Earlier in the day, at 9:34 AM IST, the Nifty50 was trading at 24,540.05, down 211 points (0.85%), and the BSE Sensex was at 80,701.33, down 750 points (0.92%), indicating a more severe initial reaction. [5 (search 3)]

Market analysts pointed out that the “recent tariff hike announcement is seen restraining a breakout rally.” [3 (search 3)] The development added to existing market jitters, which included nervousness ahead of the Reserve Bank of India’s (RBI) monetary policy outcome. [4 (search 1)]

Why the Jitters? Expert Takes and Underlying Fears

The primary fear is a resurgence of global trade tensions. As one market report noted, these concerns triggered “risk-off sentiment among investors.” [1 (search 2)] For Indian metal exporters, the direct implications are “concerns over export competitiveness and earnings impact.” [4 (search 3)]

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, commented on the situation, stating, “President Trump’s 50% tariffs on steel and aluminium is a clear message that the tariff and trade scenario will continue to be uncertain and turbulent. This headwind will impact markets.” [5 (search 3)]

Vinod Nair, Head of Research at Geojit Financial Services, also highlighted that “stability in the broader market will be contingent on strong earnings growth and receding trade tensions,” emphasizing the broader economic impact of such protectionist measures. [3 (search 2)]

The potential for retaliatory tariffs from other countries, including India, could further escalate the situation, leading to a wider trade war that could disrupt global supply chains and economic growth.

For the Retail Investor: Navigating the Turmoil

For retail investors, such sudden and sharp market movements, especially in a specific sector, can be unsettling. Key considerations include:

• Volatility: Expect heightened volatility in metal stocks in the near term.
• Avoid Panic Selling: Making hasty decisions based on one day’s news can be detrimental. It’s crucial to assess the long-term fundamentals of companies.
• Diversification: This event underscores the importance of a well-diversified portfolio to mitigate sector-specific risks.
• Research: Keep a close watch on official announcements from the US regarding the tariffs and any responses from the Indian government or industry bodies.
• Gradual Accumulation: For those with a long-term view and belief in the sector’s fundamentals (beyond immediate tariff impacts), market dips can present opportunities for gradual accumulation, but this should be based on thorough research and risk appetite.

What to Watch Next

The coming days and weeks will be crucial for the metals sector and the broader market. Key developments to monitor include:

• Official US Tariff Confirmation: The most immediate factor is whether the proposed 50% tariffs are officially confirmed and implemented by the June 4 deadline.
• Indian Government’s Response: Any statements or potential diplomatic or trade responses from the Indian government will be closely watched.
• Global Reactions: Responses from other major trading partners of the US, such as the European Union and China, could indicate the potential for a broader escalation.
• Commodity Prices: International prices of steel and aluminum will react to these developments.
• RBI Monetary Policy: While a separate issue, the outcome of the RBI’s upcoming monetary policy meeting (scheduled around June 6) will also influence overall market sentiment. [6 (search 1)]
• Company Commentaries: Statements from major Indian metal companies regarding the potential impact and their mitigation strategies will be important.
• Technical Levels: Traders will be watching key support and resistance levels for the Nifty Metal index and individual stocks. For instance, analysts had earlier pointed to Nifty support at 24,650 and resistance at 25,000 for the broader market. [6 (search 1)]

The situation remains fluid, and investors are advised to stay informed and exercise caution. The spectre of trade wars, once thought to be receding, has made an unwelcome return, reminding markets of the interconnectedness of global economies and the significant impact of geopolitical pronouncements on financial markets.

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This article is for informational purposes only and does not constitute financial advice. Always do your own research before investing.