Lookback: How the Metals Cycle Played Out from Sept 2024 to Feb 2026

A textbook 18-month sector rotation, born in Beijing's stimulus desk and buried in a global growth scare, that doubled Indian steel and aluminium names before halving the gains.

The September 2024 setup looked, in retrospect, almost too clean. China's politburo had spent three quarters letting deflation grind through its property sector, the Hang Seng metals complex was trading at multi-year lows, and Indian steel mills were operating below 75% capacity utilisation on imported coking coal that refused to break. Then on 24 September 2024, the PBOC and the Ministry of Finance unveiled a coordinated stimulus package, reserve ratio cuts, mortgage refinancing, and a one-trillion yuan recapitalisation of state banks. Within forty-eight hours, LME copper, aluminium, and zinc all gapped higher. The Nifty Metal index, which had been flatlining around the 9,400 zone through August 2024, broke above 10,100 in the cash session of 26 September 2024 on volumes that NSE bhavcopy later showed were roughly 2.3x its trailing twenty-day average. That was the starting gun.

What followed, over the seventeen months that ended with the brutal 27 February 2026 session, was a near-perfect arc of the cyclical metals trade as it has always behaved in Indian markets. The Nifty Metal index ran from those mid-9,000s lows to a marked-up peak somewhere in the high 16,000s through 2025, before unwinding almost half of that move in the January-February 2026 correction. The cumulative swing, peak-to-trough across the eighteen-month window, came in close to 80%. Plenty of investors who walked in late, around the Diwali 2025 mark, ended up holding Tata Steel and Hindalco positions that were underwater by the time February's recession-fear sell-off cleared the books.

Caption: The weekly view captures the entire trade. Note the breakout candle in the last week of September 2024, the steady marked-up channel through Q1 and Q2 2025, the distribution top through late 2025, and the high-volume breakdown candles in January and February 2026.

What triggered it

The textbook entry was a three-factor convergence. China stimulus was the loudest catalyst, but it sat on top of an already-tight supply picture in Indian flat steel (post-monsoon restocking, plus delayed expansion at JSW Dolvi), and a falling-rate macro setup where the RBI had begun signalling the start of an easing cycle in its October 2024 policy. Brokerages caught on with a lag. The first wave of upgrades, JPMorgan and Jefferies on the steel basket, CLSA on Hindalco for its Novelis exposure to US aerospace and packaging, all landed in the second and third weeks of October 2024 after the index had already added 8% from its September lows. That timing matters because it was the brokerage upgrades, not the actual fundamental shift, that pulled the second wave of institutional flow in.

NSDL custodial data for October and November 2024 showed FII flows turning sharply positive into the metals basket for the first time since early 2024. The aggregate FII print across the top-five metals names through October-November 2024 was net positive to the tune of roughly ₹4,800 crore, a meaningful inflection given that the same cohort had been net sellers for most of the preceding two quarters. DII flows, which had been the marginal buyer through the summer of 2024, did not retreat. They added on top of FII buying, a combination Indian markets rarely see for an extended run, and one that almost always produces violent up-trends when it does materialise.

What sustained it through 2025

Cycles fail when the narrative dies. This one did not, for almost a full calendar year, because three things kept refreshing it.

First, the Indian capex story stayed sticky. The Union Budget of February 2025 maintained an aggressive infrastructure allocation, the National Infrastructure Pipeline disclosures through Q1 2025 showed steel-intensive project awards holding up, and the railway capex line item, which is the single largest consumer of long steel in the country, was front-loaded into the first half of FY26. Steel mills reported that order books for TMT bars and structural sections had visibility through the September 2025 quarter by the time April rolled around.

Second, the China demand restocking that everyone had assumed was a one-quarter pop turned into something longer. By March 2025, LME warehouse stocks of aluminium had drawn down to multi-year lows, copper inventories on SHFE were back in seasonal-deficit territory, and the spread between iron ore 62% fines (Qingdao landed) and Indian domestic hot-rolled coil narrowed in a way that gave Indian integrated steel makers genuine margin expansion. Tata Steel's Q4 FY25 earnings, reported in early May 2025, posted a consolidated EBITDA per tonne that came in roughly 30% higher year-on-year, with both India operations and the European business showing improvement, the latter helped by a softer coking coal print and the modest revival of European auto build rates.

Third, the leadership inside the sector rotated cleanly, which is the marker of a healthy cyclical run. The initial leg from September to December 2024 was driven by the integrated steel names with the highest operating leverage to flat steel prices. Tata Steel led, with JSW Steel and Jindal Steel and Power close behind. By Q2 2025, leadership shifted to the non-ferrous complex, with Hindalco and Vedanta starting to outperform on the back of LME aluminium and zinc strength, plus the Novelis premium aluminium specialty product margins that finally showed up in reported numbers. By the third leg, the late-2025 run-up, leadership had broadened to the second-tier names, NALCO, SAIL, Hindustan Copper, and the mid-cap steel converters. That broadening, which classical technicians would call a participation expansion, was the last bullish signal the tape gave before it started to turn.

Caption: The daily print shows the three legs cleanly. Watch the green volume bars under the September-December 2024 leg (integrated steel led), the May-August 2025 leg (non-ferrous led), and the October-December 2025 leg (mid-cap broadening), and then the cluster of red distribution candles through January 2026.

Earnings season told the story before the price did

The aggregate metals earnings prints across the three quarters from Q2 FY25 through Q4 FY25 painted a picture that, in hindsight, peaked exactly where the price did. Q2 FY25, reported in October-November 2024, was the first quarter of margin expansion after a long stretch of decline. The aggregate sector EBITDA margin print across the top-fifteen listed metals names came in roughly 240 basis points higher quarter-on-quarter on a weighted basis. Q3 FY25 added another step up, helped by the festive restocking flush and the LME tailwind. Q4 FY25, reported across late April and May 2025, was the high-water mark on operating margins, with most managements guiding to flat-to-slightly-better margins for the September quarter and an open question on December.

Then came Q1 FY26, reported in July-August 2025. The headline numbers were still strong year-on-year, but the sequential momentum had cooled. Tata Steel's India EBITDA per tonne was flat sequentially. Hindalco's upstream aluminium realisations had peaked. JSW Steel's coking coal cost line ticked up. None of it was catastrophic. None of it broke the narrative on the day. But sell-side notes started using the word "normalisation" in late August 2025, and that was the first crack in the wall. The Nifty Metal index put in what later proved to be its closing high in the third week of November 2025, and from there the tape spent six weeks in a sideways top that distributed stock from fast money to slow money, before the breakdown got going in earnest in mid-January 2026.

The reversal

Why did it actually crack? The proximate cause was global, not Indian. Through December 2025 and early January 2026, US ISM Manufacturing prints rolled over hard, European PMIs that had stabilised in 2025 turned south, and Chinese property fixed asset investment data for the October-December 2025 quarter, released in mid-January 2026, came in materially below consensus. The market read that combination as a synchronised global growth scare, the kind of setup where commodity demand assumptions get cut across the board within a fortnight. LME copper, aluminium, and zinc all gave up their late-2025 highs in the first half of January 2026.

The 27 February 2026 session itself was a 4.1% single-day drop on the Nifty Metal index, on volumes that NSE bhavcopy that evening showed were the highest single-session traded volume in the basket since the original September 2024 breakout. That symmetry, the highest-volume up-day at the start, the highest-volume down-day at the end, was the kind of bookend that closes a cycle. FII flow data for the January-February 2026 window flipped to net selling of roughly ₹6,200 crore in the top-five metals names, which more than reversed the inflow burst of October-November 2024. DII flows did not catch the falling knife. They went neutral, then mildly negative by late February 2026. Brokerages, which had been the late upgraders on the way up, were now the late downgraders on the way down. Jefferies cut its FY27 EBITDA estimates on the steel basket by 12-18% across coverage on 23 February 2026. CLSA went neutral on Hindalco on 25 February 2026. The downgrades, like the upgrades before them, arrived after the meaningful price move.

Caption: The intraday capitulation. Note the gap-down open, the failed rally attempt around 11:30 IST, the rolling break through the prior support shelf in the post-lunch session, and the close on the day's low. Tape action that classical readers of price would call distribution capitulation.

Leadership rotation, in reverse

The way the basket fell told the same story as the way it rose, just played backwards. The mid-cap and second-tier names that led the final broadening leg through October-December 2025 were the first to crack in January 2026. NALCO, Hindustan Copper, and the mid-cap steel converters lost 25-35% from their late-2025 peaks before the large caps gave up serious ground. Hindalco and Vedanta cracked next, through the early-to-mid February 2026 stretch. The integrated steel large caps, Tata Steel and JSW Steel, were the last to break, with most of their drawdown coming inside the final three sessions of February 2026. That order, last in first out, mid-caps first, large caps last, was a near-perfect inverse mirror of the up-leg sequence. Whoever ran the rotation books got two clean trades out of one cycle if they were paying attention.

Cross-sector comparison

Over the same eighteen-month window from September 2024 to February 2026, metals was not the only sector that ran a full cyclical loop, but it was the cleanest. PSU banks, which had been the previous cycle's darling, traded sideways in a tight range and ended the window roughly flat on a total return basis. Capital goods and defence sectors ran their own marked-up trend through 2025 on the order book story, peaked in November 2025 alongside metals, and corrected less sharply through January-February 2026 because their order visibility was more contracted, less spot-sensitive. IT services, which had been a laggard through the second half of 2024, was a quiet outperformer through Q2 and Q3 2025 once the US rate cut cycle began in earnest. By late February 2026, with the global growth scare in full bloom, IT had given back almost all of its 2025 gains as well.

Pharma and FMCG, the classic defensives, ran the inverse pattern. They lagged badly through 2025 as money rotated out of them into the cyclicals, and they were the relative outperformers in January-February 2026 as the rotation reversed. Sector relative-strength prints in the final week of February 2026 had the Nifty Pharma index roughly 14% relatively stronger than the Nifty Metal index over the trailing twenty-session window, a margin that historically marks regime change.

Historical analog

This cycle rhymed with two prior Indian metals runs, neither of them perfectly. The closest analog was the 2016-2018 reflation trade, which started on the back of a Chinese stimulus impulse (the supply-side reform of late 2015 plus the 2016 fiscal expansion), ran for roughly twenty-four months, and ended on a global growth scare in late 2018 that had its own US-China trade-war flavour. That cycle delivered roughly 175% gains on the Nifty Metal index from its January 2016 lows to its January 2018 highs, before giving back about 45% into late 2018. The 2024-2026 run was shorter in duration but proportionally similar in shape, a roughly 80% swing from trough through peak to the February 2026 retrace point.

The other analog was the 2003-2008 supercycle, which was a very different beast in magnitude and duration, driven by structural Chinese urbanisation rather than a pulse of stimulus. Comparing 2024-2026 to that period is unfair to both. The 2024-2026 cycle was always a stimulus-driven cyclical bounce, never a supercycle. Anyone who positioned for the latter at the November 2025 highs found out the difference quickly enough in February 2026.

The lesson the historical analog book offers is consistent. Indian metals cycles that begin with an external demand catalyst, China stimulus, US infrastructure, or a global rate-cut impulse, tend to run twelve to twenty-four months, deliver index-level returns of 70-180%, and end when the original catalyst either fades or gets replaced by a recession scare. They do not, on a single iteration, transform into multi-year structural bull markets. Investors who treat them as cycles, with a defined entry framework and a defined exit framework, capture most of the move. Investors who narrate them as supercycles get caught on the wrong side of the second half.

VERDICT

Stance: BEARISH on the Nifty Metal index over the immediate horizon, with the caveat that the violent down-leg of late January and February 2026 had already discounted a meaningful portion of the bad news by the 27 February close.

Horizon: 3mo.

Rationale: With FIIs turning net sellers, brokerages cutting forward estimates, and the global growth scare driving the move, the sector entered the post-cycle digestion phase where index-level upside was capped until either the global macro narrative stabilised or valuations reset another 15-20%. Tactical bounces in oversold large caps were available, but the trend was no longer up.

What the cycle taught

Three observations stood out from the post-mortem. The first was that brokerage timing remained reliably late at both ends, upgrading after 8-12% of the up-move had already played out, downgrading after the bulk of the down-move was done. The second was that flow data, FII and DII custodial prints, gave a cleaner read on the cycle inflection than either earnings prints or technical levels did. The third was that leadership rotation inside the sector, mid-caps last on the way up, mid-caps first on the way down, was the single most reliable confirmation signal across the whole eighteen-month window. Anyone who watched the relative strength of NALCO versus Tata Steel in late November 2025 had a meaningfully better exit than anyone who waited for the brokerages.

That was the cycle. From Beijing's stimulus desk in September 2024 to a global growth scare in February 2026, in three legs and one capitulation, the way Indian metals cycles have always behaved and the way the next one likely will too.