The base metals pack soared higher on Thursday as Copper, Nickel and Zinc lead the charge and hit fresh 2009 highs. Last night’s US Federal Reserve’s monetary policy statement prompted a fresh outbreak of bullish sentiment. However, we feel that the current rally in prices is sentiment driven and could be met with profit-booking at higher levels. Nickel prices gained 5.9% till 4.00 p.m. IST and touched a high of $21,325 on the LME and Rs1022 on the MCX today. The metal got additional support due to labour stoppages at Vale Inco’s facilities in Canada. Copper prices gained 3.1% till 4.00 p.m. IST and touched a high of Rs310.30 on the MCX today. Aluminum prices too raced higher as the metal gained 4.2% till 4.00 p.m. IST and touched a high of Rs98.85 on the MCX. Base metals have now recaptured upside momentum and prices had been drifting for several sessions. Further volatility in prices is expected as prices are racing ahead of their fundamentals. The FOMC in its announcement yesterday said that the economic activity is leveling out. This factor could continue to provide support to base metals in the near-term. Outlook Markets will closely watch the weekly US unemployment claims data which is due at 6.00 p.m. IST today. This data is an important gauge of a country’s economic health and expectations are for a further decline, which if released as per expectations could fuel the upside in base metals. For the evening session, we recommend traders to buy on dips.

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