Shares of Indian metal companies declined sharply on July 16, dragging the Nifty Metal index into the red, as the US dollar strengthened on the back of higher-than-expected inflation data in the United States. The index emerged as the worst-performing sectoral index of the day, reflecting broad pressure across the metals pack.

The Indian rupee opened 18 paise lower, weighed down by the stronger greenback. A firm US dollar typically makes commodities more expensive for holders of other currencies, triggering global demand concerns and impacting sentiment in metal stocks.

The dollar gained after the US Consumer Price Index (CPI) rose 0.3% in June, translating to an annual inflation rate of 3.5%, significantly higher than May’s 0.1% increase. Analysts attribute the spike in inflation to the renewed impact of President Trump's aggressive tariff policy, which appears to be showing up in price data.

Morgan Stanley, in its daily market update, noted that US inflation is showing “signs of tariff pressure” and suggested that markets now expect the Federal Reserve to hold rates steady for longer, reducing the likelihood of near-term rate cuts.

ANZ Bank added that with trade talks now extended to August 1, and tariff-related uncertainties lingering, the Fed may require more data before taking a dovish turn. These shifting expectations have directly affected global commodity-linked sectors, especially metals.

Among the major losers, Jindal Stainless Limited (JSL) dropped nearly 2% to ₹677 apiece. Steel Authority of India (SAIL) and National Aluminium Company (NALCO) slipped over 1%, while Tata Steel and JSW Steel also shed nearly 1% each.

Other decliners included Hindalco Industries, APL Apollo Tubes, and Vedanta, down over 0.5%. Stocks like Hindustan Zinc, Jindal Steel & Power, and Hindustan Copper also traded in the red with marginal losses.

NMDC bucked the trend with a 1% gain, while Adani Enterprises and Welspun Corp managed to stay in the green despite the sectoral pressure.

The broad-based decline in metal stocks underscores growing investor caution amid rising inflation, tariff tensions, and a firmer dollar, all of which could weigh on earnings outlooks and global metal demand.