Hindustan Zinc shares fall 20% in two sessions after record Silver sell-off on Friday

Shares of Hindustan Zinc Ltd., the subsidiary of Vedanta Ltd. fell another 9% in early trading on Sunday, February 1, after global Silver prices had their biggest single-day drop on record last Friday. With this, the stock is down 20% in the last two trading sessions, leading to a market capitalisation erosion of nearly ₹60,000 crore.

While Silver prices were declining during the trading session on Friday itself, the extended sell-off globally took place after market hours.

Hindustan Zinc's stock had declined 12.5% last Friday, marking their biggest single-day drop since January 2008. The fall had led to a ₹36,000 crore erosion of the company's market capitalisation. Until Friday's trade, Hindustan Zinc was the most valued metal stock in India, with its market capitalisation crossing the mark of ₹3 lakh crore.

Hindustan Zinc is the only listed Silver play in the country.

During the third quarter of the financial year, Hindustan Zinc had turned net cash positive again, with the fourth quarter expected to be stronger considering the rally in Silver prices before the sell-off.

Net Silver realizations during the quarter stood at $54.7 per ounce, compared to $31.4 during the same period last year.

In line with the rally seen in Silver prices, shares of Hindustan Zinc had also doubled in value over the last two months before Friday's drop. NSE data shows that the leveraged positions on Hindustan Zinc have also doubled in the last two months.

Data from the Margin Trading Facility (MTF) on the NSE shows that the value of leveraged positions on Hindustan Zinc stood at ₹763.6 crore as of January 29, which is a 97% jump from the ₹387 crore worth of leveraged positions on December 1 last year.

Hindustan Zinc's promoter Vedanta also recently concluded an Offer For Sale (OFS) by selling up to 1.1% stake in its subsidiary to raise up to ₹3,300 crore. The fall on Friday has taken the stock price below the OFS indicative price and the floor price as well.

Shares of Hindustan Zinc ended 12.2% lower last Friday and coupled with Vedanta, contributed to 56% of the ₹1.25 lakh crore market cap rout seen on the Nifty Metal index last Friday.

(With Inputs From Nigel D'Souza)