Vedanta, Tata Steel, Nalco, other metal stocks fall as Nifty Metal slips 2%; what's weighing?

Shares of metal companies, including Vedanta Ltd, Tata Steel Ltd, Hindustan Copper Ltd, Hindalco Industries Ltd, Hindustan Zinc Ltd and National Aluminium Company Ltd (Nalco), declined in Friday's early trade as the sector came under pressure.

The Nifty Metal sub-index was down 2.08 per cent in early trade, with all its constituents trading in the red.

Brent crude prices rose to around $108 a barrel amid escalating tensions in West Asia. Higher oil prices have raised concerns over inflation and the impact on economic growth.

Meanwhile, the US 10-year Treasury yield climbed to 4.96 per cent, approaching the 5 per cent mark, while the 30-year Treasury yield rose to 5.38 per cent, its highest level since 2007, according to market data.

The rise in US bond yields and a stronger dollar have added to pressure across global markets, while metal prices remained under focus.

Metal stocks are also sensitive to movements in global commodity prices and broader economic growth expectations.

Higher crude prices can raise energy, transportation and freight costs for metal producers, while a stronger US dollar can affect dollar-denominated commodities.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said, "Headwinds for the market are getting stronger with the escalation in the Middle East conflict. Brent crude has shot up to around $108. If this high price sustains, or worse, spikes further, the impact on India's GDP growth and consequently on corporate earnings will not be insignificant. An equally strong headwind is the rise in US bond yields.

Vijayakumar added, "The 10-year yield, now at 4.96 per cent, is approaching the 5 per cent mark, which many regard as a possible inflection point for global equities. A correction in the global equity market is likely, but the timing is hard to predict."