Shares of Hindustan Zinc have declined 2% over the past two trading sessions, even as silver prices surged sharply, hitting a fresh record high of Rs 4 lakh, highlighting a disconnect between commodity prices and stock performance. The weakness in the stock is not linked to fundamentals or operational concerns, but is primarily driven by the ongoing Offer For Sale (OFS) by promoter Vedanta, which has created short-term supply pressure.

The OFS has introduced additional shares into the market, with Vedanta offering up to 0.79% of Hindustan Zinc’s equity through the base issue, along with a green shoe option for an additional 0.59% stake. Such stake sales typically lead to temporary pressure on share prices, as investors factor in the increased supply of shares over a short period.

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

Although the non-retail portion of the OFS was subscribed to 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 instead of the secondary market, meaning the strong subscription reflected interest in the discounted offer rather than incremental demand for shares on the exchange.

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

As a result, the stock’s recent movement has been driven by flow-related and technical factors, overshadowing the positive impact of rising silver prices in the near term. While higher silver prices remain supportive for Hindustan Zinc’s earnings outlook over the medium term, the OFS-related supply overhang has dominated price action in the short run.

An Offer for Sale (OFS) is a Securities and Exchange Board of India (SEBI) regulated, transparent mechanism introduced in 2012 that allows promoters or large 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 stakes, meeting minimum public shareholding norms, or for disinvestment.Hindustan Zinc shares were trading 0.8% higher at Rs 714 per share on the BSE. The stock has risen 17% in the first month of 2026.

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