Shares of metal companies fell sharply during the special session on Sunday due to Union Budget, extending losses for a second straight session as a steep correction in precious metals weighed on sentiment.

The Nifty Metal index plunged over 5% to hit an intraday low of 11,218.80 in early trade, tracking heavy selling pressure across both base and non-ferrous metal stocks.

Hindustan Copper was the biggest laggard, tumbling 19% to ₹555.10 apiece. National Aluminium Company (NALCO) dropped 14.5%, while Hindustan Zinc slid 13.5%. Vedanta and Hindalco Industries were down nearly 10% each. Among steelmakers, NMDC, Tata Steel, Steel Authority of India (SAIL) and Jindal Steel declined around 4%.

The sharp fall in metal stocks came as gold and silver prices continued their steep slide for the third consecutive session, triggering widespread profit-booking across commodity-linked assets.

Gold and silver markets witnessed a sudden and aggressive sell-off, sending shockwaves through the investment community. Gold ETFs plunged as much as 16% in early trade after gold prices crashed by nearly ₹9,000 per 10 grams in a single session. Silver prices saw an even steeper correction, falling by almost ₹17,000 per kilogram.

On the MCX, gold and silver futures opened sharply lower on February 1, extending losses from the previous sessions. Gold futures for April expiry fell 6%, or ₹9,140 per 10 grams, to open at ₹1,43,205 per 10 grams. This marked a cumulative decline of nearly ₹50,000 per 10 grams, or about 26%, in just three sessions after prices had hit a record high of ₹1,93,096 per 10 grams.

Silver futures also witnessed heavy selling pressure, mirroring the sharp fall seen in global markets.

Market participants attributed the correction to aggressive profit-booking following the recent record rally in precious metals, coupled with a stronger US dollar. The sell-off intensified after comments from US President Donald Trump, who said he had selected former Federal Reserve Governor Kevin Warsh to head the US central bank. Warsh is widely seen as hawkish and less supportive of rate cuts, which weighed on gold prices.

The sharp correction in precious metals spilled over into metal stocks, with investors rushing to cut exposure amid rising volatility and uncertainty over global monetary policy.

What do analysts say?

According to Ponmudi R, CEO, Enrich Money, the movement in gold and silver will be bearish in the short term. "MCX Gold futures have witnessed a sharp rejection from the ₹1,80,000–₹1,81,000 zone, followed by an aggressive breakdown, confirming short-term trend exhaustion after a parabolic rally. The price has slipped back toward the ₹1,36,000 region, indicating heavy profit booking and long liquidation rather than healthy consolidation. Although the broader long-term trend was bullish, the recent move clearly reflects distribution at higher levels. The rising channel support has been decisively tested, and momentum has shifted into sell-on-rise mode."

For silver, he says that the breakdown invalidates the steep bullish channel and signals panic unwinding of leveraged long positions. Momentum indicators have flipped from extreme overbought to oversold within a very short span, highlighting structural instability rather than healthy correction.