Aluminium settled up 2.19% at 123.85 tracking gain's from LME Three-month aluminum which bounced back to USD 2,035/mt on a draft of positive news. China will step up financial support for shanty town renovation and support state-owned companies to raise funds for shantytown renovation through bond issuance. A bailout agreement to rescue Portugal's largest listed bank had been reached. Finally, the light metal ended at USD 2,032.3/mt. Since lastweek Aluminum prolonged its rally after surging to a 16-month high in the week ended Jul 20. The lightweight metal drew strength from global deficit concerns. Output cuts across the globe, including China, the biggest producer and consumer of the metal, coupled with solid demand are likely to create a shortage of 136,000 metric tonnes this year and 504,000 tonnes in 2015, according to Bank of America Corp. forecast. Confirming the demand outlook, LME inventories stood circa 10% lower year-to-date. China’s State Council announced on Monday that the number of low-income houses renovated in 2013 hit more than 3.2 million and is expected to exceed 4.7 million this year. The chief administrative authority also urged local governments to approve plans on low-income housing renovation in a more efficient and timely manner. The central government will also step up its effort to support low-income housing renovation by establishing a mature system of issuing debts by local governments. The Chinese government also unveiled a flurry of other measures to provide fund for the renovation. Technically market is under fresh buying as market has witnessed gain in open interest by 1.57% to settled at 7754 while prices up 2.65 rupee, now Aluminium is getting support at 121.8 and below same could see a test of 119.6 level, And resistance is now likely to be seen at 125.1, a move above could see prices testing 126.2.

Trading Ideas:

Aluminium trading range for the day is 119.6-126.2.

Aluminium ended with gains as market sentiment picked up some after the news that Portugal’s Banco Espirito Santo has secured financial aid.

The euro zone’s PPI fell 0.8% YoY, beating expectations, and rose 0.1% MoM in June, up for the first time in six months.

Last week China reported robust manufacturing numbers while US data showed the economy rebounding sharply in the second quarter.