The weakness in metals stocks on news that the US would lift sanctions on Russian aluminium producer United Company Rusal, is unlikely to last for too long as the development was largely priced in, said analysts.

The Nifty Metal index fell 1 per cent to 3177.90, ending as one of the worst performing sectors on Thursday. London aluminium prices fell to a 16-month low on Thursday following the news of US intending to remove the sanctions on the company, which is owned by Russian billionaire Oleg Deripaska.

The US treasury notified the Congress of its intent to terminate the sanctions after divestment by Deripaska. National Aluminium Company’s shares fell 3.5 per cent to Rs 61.85 and Vedanta fell 2 per cent to Rs 202.65.

Hindalco Industries’ shares declined 1.5 per cent to Rs 223.65.

These three were the worst hit in the metal index. “This development was already in the price.

What we are seeing in the stocks is a sentimental impact.

There may be near term pressure, but I don’t expect a long-term impact,” said Sanjay Jain, senior vice-president, Motilal Oswal. Edelweiss Securities views the potential annulment of sanctions as a non-event.

“We view the potential annulment of sanctions a non-event considering: 1) Rusal’s Q3CY18 Al sales jumped 34 per cent QoQ (quarter-onquarter) upon extension of its general licenses; 2) tepid LME Al price reaction, implying the market had already factored in the removal of sanctions; 3) formidable cost-push in Al is likely to cushion prices; and 4) low inventory at LME and SHFE (Shanghai Futures Exchange),” said Edelweiss. Hindalco Industries is a preferred pick among aluminium producers for analysts thanks to its steady earnings.

“Hindalco is our top pick in metals space as it has strong India business and strong overseas business with Novelis,” said Jain of Motilal Oswal. Edelweiss, too, has a buy on the stock with a target price of Rs 307. Bloomberg data showed that 26 of the 29 analysts tracking Hindalco have a buy rating on the stock with consensus target price at Rs 310.7.