Metals emerged as the worst-performing sector on Tuesday, with stocks such as Vedanta Ltd, Hindalco Ltd, Nalco, Hindustan Zinc (HZL) and Tata Steel Ltd falling up to 9 per cent amid a fall in metal prices and profit booking. In the case of aluminium, rising Chinese exports and near record high domestic production weighed on aluminium prices, Kotak said in a note today.  

That said: "Annual global aluminium output remained lower in May, highlighting ongoing supply constraints outside China. As a result, underlying market balances remain relatively tight, providing continued support to the medium-term outlook," Kotak said  in a commodity note. 

Nalco Ltd declined 4.40 per cent to Rs 361.50 at 10.40 am. Hindalco Ltd fell 2.72 per cent to Rs 986.85. Hindustan Zinc Ltd shed 2.81 per cent to Rs 555.35. Steelmakers Jindal Steel Ltd, SAIL and Tata Steel Ltd dropped 1-3 per cent. Jindal Stainless and JSW Steel fell up to 1 per cent.

In the case of steelmakers, Nomura noted that global steel prices remained largely range-bound last week, while India witnessed a mild correction in flat steel prices alongside another steep decline in long products. 

"We maintain our positive outlook on the India steel sector, and believe global factors, especially China, should have a limited impact on the earnings potential of major steel players. Our positive stance on the India steel sector is underpinned by improving domestic price momentum despite global headwinds," Nomura said.

It maintained 'Buy' recommendation on Tata Steel, JSW Steel, Jindal Steel and Lloyds Metals and Energy.

Vedanta Ltd, meanwhile, plunged 8.85 per cent to hit a low of Rs 278.80 on  BSE. There were reports that promoter group entity Twin Star Holdings was looking to offload up to 1.7 per cent equity stake via block deals. The sale was expected to raise Rs 1,890 crore for the promoter at Rs 291 per share floor price, a Moneycontrol report suggested.