Explained: Why Hindustan Zinc shares fell 2% despite silver prices rising to Rs 4 lakh

Shares of Hindustan Zinc have fallen 2% in the past two trading sessions even as silver prices rose sharply to hit a new all-time high of Rs 4 lakh, highlighting the disconnect between commodity prices and stock performance. The stock’s weakness is not related to fundamentals or operational concerns but is mainly driven by promoter Vedanta’s continued Offer For Sale (OFS), which has created short-term supply pressure.The OFS has introduced additional shares to the market, with Vedanta offering up to 0.79% of Hindustan Zinc’s share capital through the base issue, along with a green shoe option for an additional 0.59% stake. Such stock sales typically lead to temporary pressure on stock prices as investors take into account the increased supply of shares for a short period of time.

Another major factor weighing on the stock is the OFS floor price of Rs 685 per share, which is lower than recent market levels. In such cases, the price floor often acts as a short-term price anchor as investors prefer to bid in the OFS rather than buy shares on the open market at higher prices. This shifts demand away from the secondary market, limiting the upside and keeping the stock under pressure until the offering process is complete.

Although the non-retail portion of the OFS was subscribed 1.42 times on the first day, this demand did not translate into immediate buying support for the stock. Institutional investors largely participated through the OFS mechanism rather than the secondary market, meaning the strong subscription reflected interest in the competitively priced offering rather than increasing demand for shares on the exchange.

The OFS is structured over two trading sessions, with private bidding opening on Thursday. Until clarity emerges on private participation and final allocations, market participants generally remain cautious, resulting in subdued trading activity and softer prices in the meantime.

As a result, the stock’s recent move has been driven by flow-related and technical factors, which overshadowed the positive impact of rising silver prices in the short term. While higher silver prices continue to support Hindustan Zinc’s earnings prospects in the medium term, the OFS-related supply glut has dominated the near-term price action.

An Offer for Sale (OFS) is a Securities and Exchange Board of India (SEBI) regulated, transparent mechanism introduced in 2012 that allows promoters or major shareholders of listed companies to sell their existing shares directly to the public through a stock exchange bidding platform. Unlike an IPO, no new shares are created; it is used for reducing promoter holdings, meeting minimum public shareholding norms or for disinvestment. Shares of Hindustan Zinc were trading 0.8% higher at Rs 714 per share on the BSE. The stock is up 17% in the first month of 2026.

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