New Delhi, [India] January 15 : The Indian metals and mining sector is expected to remain in favour during 2026, driven by supportive global macro factors, strong domestic demand, and recent policy interventions like safeguard duties, according to a report by HSBC Global Investment Research.
"Overall, we remain constructive on the Indian metals sector given a supportive global macro and under-ownership," the report said. It noted that while 2025 was dominated by base and precious metals, the news flow for the steel sector is expected to improve significantly in 2026.
The report highlighted several tailwinds for the industry, including a weaker US dollar, supply-side challenges in copper and aluminium, and robust balance sheets across the sector. "Institutional under-ownership in the context of strong balance sheets (vs previous cycles), and supportive policy means the sector should remain in favour in 2026," HSBC stated.
Following a weak 2025 where domestic steel prices traded at steep discounts, the outlook for Indian steel is "improving on the margin". The report anticipates that steel equities will catch up with base metals in 2026, supported by an earnings floor established by the newly imposed three-year safeguard duty on flat steel imports.
"The safeguard duty imposition provides an earnings floor and the large steel domestic price hikes over December-January should support 1HCY26 earnings," the report added. Indian mills have already implemented cumulative price increases of approximately Rs 2,000 per tonne in December, with further hikes of Rs 1,500-2,000 per tonne expected in January.
While the medium-term outlook is positive, the report cautioned that the third quarter of FY26 might be weak for steel companies due to lower domestic prices and higher coking coal costs. Looking at the broader market, the report noted that Global EM funds are increasingly looking at metals and mining after years of being underweight.
This increased institutional interest, combined with strong domestic demand growth, which is expected to normalize in the 6-7% range, is likely to drive valuation multiples higher across the sector.