Why Hindustan Zinc's shares are falling sharply
What's the story
Hindustan Zinc's shares have witnessed a steep decline of over 7% in the last two trading sessions. The fall was triggered by a sharp drop in silver prices on the Multi Commodity Exchange of India (MCX). On Monday, the company's stock fell over 2%, hitting an intraday low of ₹621.45 on BSE and extending losses to more than 7% over the last two trading sessions.
Market impact
Silver prices witness historic crash on MCX
Silver prices have witnessed a major selloff on MCX, plunging over ₹5,000 per kg in a day. The fall is largely attributed to rising Iran war tensions and fading hopes of a rate cut this year. Following the government's import duty hike, MCX silver has corrected nearly 13% from its peak of ₹3.04 lakh in just three trading sessions.
Price factors
Geopolitical tensions and demand destruction impact silver prices
The sharp correction in silver prices can be attributed to demand destruction at elevated price levels. Unlike gold, silver has a large industrial demand component across sectors such as solar panels, semiconductors, electric vehicles (EVs), batteries, electronics, AI infrastructure, and green energy systems. Geopolitical tensions linked to the Iran conflict initially triggered safe-haven buying across precious metals, but later shifted focus toward potential prolonged high oil prices affecting global growth momentum.
Demand forecast
Rise in import duty may dent India's silver demand
India, the world's largest silver importer, may also witness a fall in the domestic demand after the steep hike in import duty. Nirpendra Yadav, Senior Commodity Analyst at Bonanza, said that the jump in duty to 15% significantly increases local prices and may dent jewelry demand while slowing industrial imports.
Company achievements
Hindustan Zinc posts record quarterly profit, revenue growth
Despite the market fluctuations, Hindustan Zinc reported a whopping 68% year-on-year jump in consolidated profit after tax for the March quarter at ₹5,033 crore. Revenue from operations also jumped 49% to ₹13,544 crore from ₹9,087 crore last year. The company also posted its best-ever quarterly operational performance on various key metrics, with mined metal production hitting a record 315 kilotonnes and refined metal output hitting an all-time high of 282 kilotonnes.