Metal stocks take a hit as global aluminium prices fall

Shares of metal stocks took a beating on Tuesday morning as investors turned cautious of falling aluminium prices, as US hinted at easing of sanctions on Russian firm Rusal.

The Nifty Metal index was down over 3 percent, dragged by losses in MOIL, Coal India, JSW Steel, SAIL, Hindustan Zinc, Hindalco and NALCO. The stock of NALCO fell the most—around 9 percent— followed by Hindalco, which plunged over 8.5 percent as well.

Aluminium prices continued to fall on Tuesday after Washington gave US customers of Russian producer United Company Rusal more time to close out their business with the company and comply with sanctions.

The US sanctions on Rusal, announced on April 6, last week drove prices for the metal to their highest since mid-2011 on fears that the global market could face shortages.

The US Treasury gave Americans until October 23 instead of June 5 to wind down business with Rusal and said it would consider lifting the sanctions if Rusal's major shareholder, Russian tycoon Oleg Deripaska, ceded control of the company.

Metal stocks have had a good run in the past few weeks, largely on the back of higher aluminium prices due to the imposition of these sanctions. Additionally, a rally in other commodities as well boosted such stocks.