Tata Steel, the biggest loser on the Nifty, traded around 6 per cent lower at Rs. 343, while Hindalco shares were down 4 per cent at Rs. 117 as of 3.10 p.m. Sesa Sterlite shares traded down 3.7 per cent at Rs.177.
The selloff in metal stocks came on rising fears of a slowdown in China. Dealers were especially nervous about iron ore prices following an 8 per cent slide on Monday that fuelled unease about the health of China's giant steel sector. The fall in iron ore prices would make Chinese steel makers more competitive impacting the profitability of Indian steel makers
The domestic over capacity, falling iron ore prices, and rupee appreciation are the main reasons behind the sharp fall in metal stocks. The selloff in metal stocks comes at a time when the broader markets have rallied to record highs, partly on hopes of a stable government post elections due by May.