MUMBAI – The Indian metals sector faced a “Black Sunday” as shares of Vedanta Ltd and its subsidiary, Hindustan Zinc Ltd (HZL), extended their brutal decline during a special Budget Day trading session on February 1, 2026. Despite reporting record-breaking quarterly earnings earlier in the week, the two mining giants were caught in the crosshairs of a $5 trillion global commodity wipeout that has sent shockwaves through world markets.
Hindustan Zinc hit its 10% lower circuit early in the session, while Vedanta slumped nearly 10%, as investors ignored strong fundamentals to escape a rapidly deflating commodity bubble.
The Silver Shock: How a 27% Price Crash Batters Hindustan Zinc
The primary driver of the panic is the unprecedented collapse in silver prices. After hitting a historic peak of ₹4,20,048 per kg on Thursday, silver futures on the MCX suffered their worst-ever crash, plunging 27% (over ₹1.07 lakh) in a single session.
Why this matters for HZL and Vedanta:
- Direct Revenue Link: Hindustan Zinc is one of the world’s largest silver producers. Silver contributes nearly 35-40% of the company’s EBITDA.
- Market Cap Erosion: In just two trading sessions, HZL has lost over ₹36,000 crore in market value, falling from its position as India’s most valued metal company.
- The OFS Trap: The crash has pushed HZL’s share price below the ₹685 floor price of Vedanta’s recent Offer for Sale (OFS), leaving retail investors who participated in the stake sale facing immediate notional losses.
The Paradox: Strong Q3 Fundamentals vs. Macro Panic
The irony of the sell-off lies in the stellar financial health of both companies. Just days ago, they reported “blockbuster” Q3FY26 results:
| Metric | Vedanta Ltd (Q3) | Hindustan Zinc (Q3) |
| Net Profit | ₹7,807 Cr (+60% YoY) | ₹3,916 Cr (+46% YoY) |
| Revenue | ₹45,899 Cr (+19% YoY) | ₹10,980 Cr (+27% YoY) |
| EBITDA Margin | 41% (Record High) | 54% (Strong Core Growth) |
Analyst Note: “We are seeing a complete disconnect between micro-performance and macro-reality. Vedanta and HZL are operationally at their strongest, but they are being treated as proxies for a global ‘dash for cash’ as the US Dollar strengthens,” noted a senior commodity strategist.
How Global Factors Triggered the $5 Trillion Wipeout
The extension of the slide is being fueled by a “Perfect Storm” in global economics:
- The “Warsh” Effect: Reports that US President Donald Trump will nominate Kevin Warsh as the next Fed Chair have sent Treasury yields soaring. Warsh is viewed as a “hawk” who may slow down rate cuts, making non-yielding assets like gold and silver less attractive.
- Dollar Dominance: The US Dollar Index (DXY) rebounded sharply to 104 levels, making metals more expensive for global buyers and triggering massive “margin calls” for hedge funds.
- The AI Tech Rout: A sudden sell-off in US “Mag 7” tech stocks forced institutional investors to liquidate their profitable metal positions to cover losses in equities, leading to a coordinated $5 trillion market cap drop across gold and silver.
What Should Investors Do?
While the immediate price action is “catch a falling knife” territory, the long-term structural story remains intact.
- Vedanta’s Demerger: The company is on track to split into five listed entities by May 2026, which analysts believe could unlock significant value once the commodity volatility subsides.
- Budget 2026 Factor: Investors are closely watching the Union Budget for any announcements on mining royalties or infrastructure spending that could provide a floor for the sector.
Support Levels to Watch:
- Vedanta: Major support lies at the ₹600–₹615 zone.
- Hindustan Zinc: Watch the ₹550 level, which acted as a strong base during the 2025 rally.