Aluminium on MCX settled up 0.25% at 122.70 gained marginally on fresh buying, tracking firmness from LME Aluminium which gained 0.9 per cent to finish at $US1,819, having hit a 20-month peak last week on talk of potential capacity cuts in China. While investors are waiting to see what, if anything, the government announces after the Lunar New Year break. Generally the dips in base metals prices seem to be attracting buying, the exceptions being aluminium that probably overshot on the upside in recent weeks. Activity in China's manufacturing sector expanded slightly more than expected in January, but at roughly the same pace as in December, an official survey showed. The official Purchasing Managers' Index (PMI) stood at 51.3 in January, compared with the previous month's 51.4, and above the 50-point mark that separates growth from contraction on a monthly basis. The U.S. Federal Reserve is expected to keep interest rates unchanged on Wednesday in its first policy decision since President Donald Trump took office, as the central bank awaits greater clarity on his economic policies. Trump has promised a large infrastructure spending program, tax cuts, a rollback of regulations and a renegotiation of trade deals but has offered few details or a timeline for their roll out since his victory in the Nov. 8 election. The Fed raised its benchmark interest rate at its last policy meeting in December, the second such move in a decade, to a target range between 0.50 percent and 0.75 percent. It forecast a further three rate increases this year. Technically market is under fresh buying as market has witnessed gain in open interest by 16.16% to settled at 2235 while prices up 0.3 rupees, now Aluminium is getting support at 122.1 and below same could see a test of 121.4 level, And resistance is now likely to be seen at 123.3, a move above could see prices testing 123.8.

Trading Ideas:

Aluminium trading range for the day is 121.4-123.8.

Aluminium gained as support seen from weak dollar and on talk of potential capacity cuts in China.

Activity in China's manufacturing sector expanded slightly more than expected in January, but at roughly the same pace as in December.

Investors are waiting to see what, if anything, the government announces after the Lunar New Year break.