Base metals

Copper gained for a second consecutive day in MCX, trailing a rally in gold and oil, on speculation that accelerating inflation will keep the metal price above historical averages. Lead Zinc and nickel also rose.

The bullion climbed to a record and oil traded within 2 cents of a record, triggering concern about inflation. Higher energy prices buoy production costs of industrial metals including copper and aluminium.

Prices of metals will be supported by growth in emerging economies like China, the world's largest user of all metals.

The Commerce Department reported new factory orders rose 1.5 pct in November, which is the largest monthly increase since July. Factory orders excluding transportation equipment were up 1.4 pct, the largest gain since September and also above expectations for the month.

Manufacturing activity across the US contracted in December after 10 straight months of expansion, according to a key survey out yesterday. The Institute for Supply Management said its index of US manufacturing activity fell to 47.7 in December, down from the 50.8 reading in November. A reading below 50 signals contraction, while any reading above 50 signals expansion.

The new orders component of the index fell into contraction territory, dropping to 45.7 from 52.6 in November. The production component of the index followed a similar path, falling to 47.3 from 51.9.

MCX Copper Feb (Daily Chart)

Technical Outlook:

Momentum studies are still bearish but are now at oversold levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over down which is a bearish indication. The stochastics indicators are decreasing from overbought level, which is bearish and should support lower prices. The market's short-term trend is negative as the close remains below the 9-day moving average. The upside closing price reversal on the daily chart is somewhat positive.

Recommendations:

MCX Copper Feb: Buy at 274-75 for the target of 279 and 282 with stop loss at 270.50



MCX Zinc Jan (Daily Chart)

Technical Outlook:

Momentum studies are still bearish but are now at oversold levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over down which is a bearish indication. The stochastics indicators are decreasing from overbought level, which is bearish and should support lower prices. The market's short-term trend is negative as the close remains below the 9-day moving average. The upside closing price reversal on the daily chart is somewhat positive.

Recommendations:

MCX Zinc Jan: Buy at 99.50-100 for the target of 103.20 and 105 with stop loss at 97.60



MCX Nickel Jan (Daily Chart)

Technical Outlook:

Momentum studies are still bearish but are now at oversold levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over down which is a bearish indication. The stochastics indicators are decreasing from overbought level, which is bearish and should support lower prices. The market's short-term trend is negative as the close remains below the 9-day moving average. The upside closing price reversal on the daily chart is somewhat positive.

Recommendations:

MCX Nickel Jan: Buy at 1125-20 for the target of 1170 and 1190 with stop loss at 1105



MCX Lead Dec (Daily Chart)

Technical Outlook:

Momentum studies are still bearish but are now at oversold levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over down which is a bearish indication. The stochastics indicators are decreasing from overbought level, which is bearish and should support lower prices. The market's short-term trend is negative as the close remains below the 9-day moving average. The upside closing price reversal on the daily chart is somewhat positive.

Recommendations:

MCX Lead Jan: Buy at 105-104.80 for the target of 106.80 and 108.50 with stop loss at 102.80