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Hindustan Zinc Shares Tumble Amid Silver Price Rout
Hindustan Zinc shares plunged nearly 5 percent on January 7, marking a near three-week low. This sharp decline tracks a significant tumble in silver prices, which fell up to Rs 4,000 per kilogram within an hour. The drop in the precious and industrial metal's value also hit silver exchange-traded funds, which slid over 3 percent.
Silver Futures See Sharp Decline
Silver futures on the Multi Commodity Exchange of India (MCX) saw considerable selling pressure. March expiry contracts dropped more than Rs 3,000 to ₹2,47,529 per kilogram, a day after touching a lifetime high of ₹2,59,692 per kg. Further out, May expiry contracts fell over Rs 3,300 to ₹2,54,876 per kilogram, while July expiry saw a steeper fall of over Rs 4,000, reaching ₹2,62,399 per kilogram.
Silver ETFs Mirror Price Slump
The volatility in the physical and futures markets was mirrored in the investment space. Numerous silver ETFs listed in India, including Edelweiss Silver ETF, HDFC Silver ETF, and UTI Silver ETF, reported losses exceeding 3 percent. Other funds like Kotak Silver ETD and Motilal Oswal Silver ETF also registered declines of nearly 3 percent, extending a sharp downturn seen over the past two sessions.
Analyst Views on Volatility and Outlook
Market observers point to profit booking and a stronger U.S. dollar as potential drivers for the sharp correction in silver prices. Analysts, however, suggest that while silver exhibits high volatility, the medium-term outlook remains constructive. Persistent supply constraints and strong structural industrial demand, particularly from sectors like electronics and solar energy, are expected to keep the market in deficit.
Near-term price movements will likely be dictated by U.S. dollar strength and real interest rates. Any upward revision in yields tends to pressure non-yielding assets like silver, whereas softer yields can restore their appeal. Despite the current choppy conditions, the fundamental demand-supply equation offers a supportive backdrop for the metal in the longer term.
