Hindustan Zinc share price tanks 7%, snaps 3-day winning run as silver rate today crashes 9%

Shares of metal company Hindustan Zinc faced intense selling pressure on Thursday, February 5, amid a sharp plunge in silver prices. The metal stock declined as much as 7% to ₹594.05 on the BSE, snapping its three-day winning run.

Hindustan Zinc is one of the country's largest silver producers, and any decline in prices can affect the company's operating performance. The stock has emerged as one of the significant beneficiaries of the rise in silver prices, as the stock gained 38% last year.

It started off January on a firm note, but has declined 18% from its 52-week high as the silver rally came to a screeching halt last week.

Harshal Dasani, Business Head at INVasset PMS, said that the weakness in Hindustan Zinc shares mirrors this near-term correction in silver prices, given the stock’s sensitivity to underlying metal price movements and sentiment around base and precious metals.

However, equity reactions often tend to overshoot in commodity-linked stocks during phases of metal price volatility, he added.

Nirpendra Yadav, Sr. Commodity Research Analyst at Bonanza, said that Hindustan Zinc's sensitivity to silver comes down to business fundamentals and market perception; unlike a pure zinc or lead miner, Hindustan Zinc generates a meaningful portion of earnings from silver — estimates often suggest 40–45% of its EBITDA can come from silver realisations when prices are elevated.

When silver prices rise, it can lead to higher revenue and margins with relatively stable mining costs, raising expectations of a stronger profit. On the flip side, a silver price fall compresses profit expectations quickly because silver contributes a big share of earnings without proportionate cost leverage.

So, equity markets price the stock not just on zinc prices, but heavily on silver movement — making it behave more like a hybrid base/precious metal producer, explained Yadav.

“While near-term earnings expectations may see some moderation due to softer realisations, the medium-term outlook remains anchored to structurally strong demand, disciplined supply, and improving cost efficiencies across the sector,” Dasani opined.

MCX silver rate today down 9%

After gaining for two days in a row, silver prices once again witnessed intense selling pressure today in the domestic futures market. MCX silver rate today declined 9% to ₹244,654, extending its slide from the record high of over ₹420,000 scaled last Thursday. Meanwhile, COMEX silver prices tumbled over 16% to $73.415.

Silver had seen a sharp run-up over the past year, driven by strong industrial demand expectations, tight physical availability, and rising investor interest alongside gold. In 2025, silver prices zoomed over 170%, making it the best asset class for investors.

The recent correction in silver prices has to be viewed in the context of short-term positioning rather than a breakdown in fundamentals, said Dasani.

“Importantly, physical demand indicators continue to remain resilient, particularly from industrial applications linked to electronics, renewable energy, and defence manufacturing. Historically, silver has been more volatile than gold, and such pullbacks are a feature of the metal, not a signal of trend reversal,” he said.

Additionally, MCX increased margin requirements on silver futures, forcing some leveraged positions to unwind and amplifying selling pressure.

Amit Goel, Chief Global Strategist at PACE 360, however, believes that gold and silver prices topped out last Friday, when both precious metals reached new highs before sharp selling was triggered.

"Those who held positions at higher levels on Friday morning and are still holding them are advised to book their profit/loss on rebound and exit. Rebounds in gold and silver prices from now onwards should be treated as dead-cat bounces, where the fall will be greater than the rebound," he added.

Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions.