Why did the metals unravel so sharply during the week, especially stocks like Coal India, Vedanta and JSW Steel?

There was a massive correction in global metal stocks with the BSE metals index correcting by more than 7% in the last one week. This comes on the back of 150% to 200% rally in most metal stocks in the last 6 months so some amount of correction is par for the course and not anything to be worried about. Big commodity losers during the week included stocks like Coal India, Vedanta, JSW Steel and SAIL and a lot more in that space.

There were broadly two key reasons for the sharp fall in metal stocks. The first reason was the sudden strengthening of the USD, which was evident in the weakening rupee. Since global metals are denominated in dollars, this led to a fall in metal prices. The second and more important reason was China’s attempts to sell metal reserves to cool metal inflation. They have been deliberately doing this to check the input cost inflation in metals.