Base metal prices ended on a mixed note on Tuesday as the dollar staged a fightback. After two days of substantial price rises, some metals ended in the red as profit-booking came in. Prices also came under pressure after the release of US economic data which was poor than market expectations. However, the fall in prices cannot be taken negatively as it is a temporary pause given the positive fundamentals coupled with an upsurge in investment interest. China’s growth rate is expected to be positive and that could lead to higher buying during the rest of the week. Copper prices subsided on the LME today as stock markets shifted lower with optimism over earnings reports tailing off, while a bearish inventory report also damaged sentiment. Broadly, equities continue to be a key driver of base metals direction as investors with a tolerance for risk sell the dollar in pursuit of greater gains elsewhere. The current corporate earnings season has buttressed optimism that a global economic recovery is gaining pace; this has been further backed up by suggestions that the economic recovery is exceeding expectations in many regions of the world. Fundamentally, strikes continue to underpin copper as the wage negotiation season unfolds. On the macroeconomic front, the Dollar Index touched a 14-month low against a basket of major currencies on Tuesday during the Asian session. The currency managed to make some gains in the later part of the trading session, helped by a pullback in equity markets in Europe and America. Though the dollar gained across the board on Tuesday it still remained far from the highs of the day. Yesterday’s better than expected earnings results in the US were offset by a weak report on housing starts and building permits. Building permits dropped in the US, indicating that the market could slow once government incentives elapsed. Overall our view for base metals this week remains bullish as demand from developing markets of Asia and South America props up prices, outweighing declining demand from the West. Chinese economic data is expected to be out tomorrow and the forecasts indicate positive growth. If the data comes in as per expectations then base metal prices could receive further support to the upside. On the macroeconomic front, Though the dollar rose on Tuesday, the currency still remains under pressure. Till interest rates remain low in the US, we do not foresee a change in the trend of the dollar. Only negative economic data from the US could lead to strength in the currency. Copper Copper prices are sideways with immediate support for MCX November contract seen at Rs.296.90. Further below, crucial support is seen at 294.25 levels. Whereas resistance is seen at Rs.304.20 levels & further upwards at Rs. 307.45 levels. Zinc Zinc prices are sideways with immediate support seen at Rs.96.60 levels for MCX October contract whereas crucial support is seen at Rs.95.40 level. Short-term resistance is seen at Rs.98.55 whereas major resistance is seen at Rs 99.30 levels.

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