India has always been a land of metals and minerals, especially when it comes to steel and aluminium, India has vast resources and production capacity, thus growing consistently over the years. Investments are flowing into the Indian metal sector from different parts of the world, and this is again boosting the entire industry. So, to track this entire sector, we have the Nifty Metal Index, and this article will revolve around the index, its constituents, selection criteria, investment process, returns, risks, and more. 

Nifty Metal Index – Overview & Constituents 

The Nifty Metal index reflects the performance of the top 15 metal manufacturing companies listed on the National Stock Exchange. It also includes the mining companies in it. The index is computed on the basis of the free-float market capitalization method.  The index helps investors understand how the overall sector is performing, and also helps in tracking the stocks it is composed of. 

The Nifty Metal index stocks list includes: (As of 26 March 2025)

1. APL Apollo Tubes Ltd.
2. Adani Enterprises Ltd.
3. Hindalco Industries Ltd.
4. Hindustan Copper Ltd.
5. Hindustan Zinc Ltd.
6. JSW Steel Ltd.
7. Jindal Stainless Ltd.
8. Jindal Steel & Power Ltd.
9. NMDC Ltd.
10. National Aluminium Co. Ltd.
11. Ratnamani Metals & Tubes Ltd.
12. Steel Authority of India Ltd.
13. Tata Steel Ltd.
14. Vedanta Ltd.
15. Welspun Corp Ltd.

The top ten stocks by weightage – 

Stock	Weightage (%)
Tata Steel Ltd.	19.58
Hindalco Industries Ltd.	15.88
JSW Steel Ltd.	15.71
Vedanta Ltd.	11.52
Adani Enterprise Ltd.	8.99
Jindal Steel & Power Ltd.	5.59
APL Apollo Tubes Ltd.	4.48
NMDC Ltd.	3.71
Jindal Stainless Ltd.	3.28
National Aluminium Co. Ltd.	2.74

Selection Criteria

The stock selection criteria for the Nifty Metal index are as follows – 

• The constituent companies need to be a part of the Nifty 500 universe during the review process. Since this is a sector-specific index, and in case the eligible stock count cannot be fulfilled from the Nifty 500 universe, then stocks are considered from the top 800 stocks of the Nifty universe. The ranking of the stocks is done based on average daily turnover and also average daily market capitalisation of the last six months. 
• As it is a metal index, all the constituent stocks have to be from the metal and mining sector
• In the previous six months, the constituent company must have been traded for at least 90% of the trading days
• The constituent company needs to have a minimum listing history of at least a month on the date of cutoff.  

Now the stocks are shortlisted as per these selection criteria, and then for calculating the index, the weights are introduced, which will be discussed in a later section of the article. 

Factors Affecting the NIFTY METAL Index

The factors that affect the Nifty Metal index are – 

• Environmental Factors: The first and foremost crucial factor that affects the metal sector as a whole is environmental concern. Whether it’s climate change, water management, environmental regulations, or land reclamation processes, all affect the metal and mining sector, and if the productions are affected, the stocks lose their charm, and thus the Nifty Metal index drops and vice versa.  
• Geopolitical Factors: The metal sector is highly sensitive to geopolitical issues as well. From trade wars, which are currently going on between the US and the rest of the world, then geopolitical instability like in Iran, Ukraine, and other countries, all these affect the metal prices as the demand and supply of metal gets disturbed. 
• Economic factors: The demand and supply of metals also depend on the economic condition of the nation. If the nation is economically stable and growing, then demand increases, taking the stocks of the metal sector higher, and thus the index as well. When the economy is slow, then the demand falls, taking the sector and the index down. 
• ESG Norms: The Metal and mining sector is a labour-intensive sector, and thus ESG norms are significant here. Changes in the norms, especially in the labour laws, environmental laws, can affect the sector a lot. This can again take a toll on the index and vice versa.

NIFTY METAL Index Calculation Method

For the Nifty Metal index, the free-float market capitalisation method is put to use. 

• After the selection procedure, once the 15 stocks are shortlisted, weights are assigned to them. 
• The individual weight of the stocks should not be more than 33%
• The top 3 stocks’ weights combined must not exceed 62% during the time of rebalancing. 
• Now the free-float market cap of the stocks is summed up, and then using the formula below, the Index value is determined. 

Nifty Metal Index Value = (Free-float Market Cap/ Base Market Cap) *1000

Performance and Returns

Since the inception of the index, it has been performing consistently and has had some significant returns recorded over the long term. 

Here are the returns for different periods – 

Period	Price Return (%)	Total Return (%)
YTD	-4.98	-4.97
1 Year	3.75	4.50
5 Years	29.62	31.58
Since Inception	10.46	12.60

Enjoy investing in the top stocks of the Nifty 500 universe with the Nifty Metal index on the Shoonya App!

Risk and Volatility

Since Nifty Metal is investing in a single sector, the diversification quotient is less. However, there are 15 stocks in the index, which adds up some diversification and helps in reducing the risk to some extent. 

The standard deviation of the index for 1 year stands at 26.45%, while that for 5 years stands at 30.78%, and since inception, if you see then the average has been around 34.01%. 

The beta compared to the Nifty 50 is a bit higher. For one year, it is 1.40, while for 5 years it has been 1.15 and 1.24 since inception. 

How to Invest in the NIFTY METAL INDEX?

You can invest in the Nifty Metal Index using ETFs, index funds, or you can trade them on the trading platform. You can also trade Nifty Metal Index futures and options in the F&O section of Shoonya’s app. To do so, you have to add the index to your watchlist following these steps – 

• Open the Shoonya app.
• Head to the “Watchlist” tab located at the bottom of your screen.
• In the search bar, type “NIFTY IN” or “SENSEX IN” and add it to the watch list, and then you will be able to see the indices. 
• Once you find your desired index, that is the Nifty Metal Index, click on the add option given on the right side.
• Now you can see the index on the watchlist. 

Top ETFs and Index Funds of the Nifty Metal Index 

• ICICI Prudential Nifty Metal ETF
• Mirae Asset Nifty Metal ETF

Conclusion

The metal sector is poised to grow significantly in the upcoming years, both globally and domestically. Thus, if you are interested in investing in this sector, or want to track the sector for existing investments, then just add the index to your watchlist, and you are all set to have a constant eye on the metal stocks in the market. 

Nifty Metal Index |FAQs

Source: NSEIndices

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Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.