Base metals complex gained upside momentum, mainly on the expectations of a rise in demand as strong ISM data raised the hopes of a quick recovery. In addition, weaker dollar also supported the upside in prices.

Lead, Nickel and Copper were the leaders for the day, gaining more than 4% on MCX.

The dollar on Monday slid to its lowest this year against the euro and a basket of currencies as stronger-than-expected U. S. data and sharp gains in equities reduced safe-haven demand for the greenback.

Shanghai copper futures opened 3 percent higher on Tuesday while London futures held near seven-month highs near $5,100, underpinned by data suggesting that the world is pulling out of recession.

Expanding Chinese industrial activity in May, and positive purchasing manager data from Europe and the United States helped drive the dollar down to its weakest against the euro this year and lift equities and commodity prices.

Nickel jumped 5 percent to an eight-month high of $14,650 a tonne on Monday after manufacturing data showed the worst of the recession could be over, boosting of economic recovery.

Base Metals: We expect the rally to continue in base metals complex. Nickel and Copper look good for the day and we recommend buying at every dip. One should look for the Auto sales and Truck sales data to be released later during the day. Any improvement in this data can support Aluminium prices and one can buy Aluminium at dips in the latter half of the day.

Copper saw a sharp upside in the previous Session, achieving our yesterday’s target. The RSI breached the earlier levels and moved above 60, bringing in positive sentiments for copper. The +DI has given cross-over on upside with –DI yesterday and added to the bullishness. However, looking at the chart copper may face resistance at earlier higher levels of 241-43. Thus, one can enter in copper at pull back around 238-35.

Zinc prices are continuously rising after breaching the 71.5 levels. The MACD, which had gone below Zero line, is now seen crossing the Zero Line on the up-side. This confirms the uptrend in Zinc. Thus, one can go long in Zinc at every dip above 72.

Lead Prices moved up sharply to 77.6. However, looking at the chart, lead may face resistance at 77.45 which is the earlier high. Thus, one should make fresh buying in lead above 78. Rather one can buy at dips on account of profit booking around 75, with a Stop loss of 73.8 for the day.

Nickel prices breached the long time resistance at 666 at closing, closing near the top of 686. Nickel now looks bullish above 660. The RSI which was seen taking resistance at earlier highs also breached the resistance area and moved out. Thus, the rising ADX and RSI confirm the uptrend in Nickel. The next target on upside can be 740 levels in the near term.