Zinc settled down -1.4% at 123.20 declined on slowdown in China's manufacturing data as well as the US Federal Reserve further stimulus tapering. Further investors and speculators stayed cautious over booking fresh positions in the industrial metal ahead of the outcome of the US Fed’s policy meet where the central bank was primed to cut stimulus further clouding the demand outlook for base metals. China’s final HSBC PMI released earlier fell to a six-month low of 49.5 in January, down from a preliminary reading of 49.6 and compared to 50.5 in December. Meanwhile, the Fed said Wednesday that it would reduce its monthly bond buying program by USD10 billion to a total of USD65 billion a month, in a widely anticipated decision. The U.S. central bank said growth signals are encouraging, and the unemployment market shows improvement "on balance". The Fed left unchanged its statement that interest rates are likely to remain low even after the unemployment rate drops below 6.5%, the threshold at which the central bank has previously said it would start to consider rate increases. The Fed added it will keep a close eye on economic indicators before deciding to wind down its stimulus program even further. The U.S. is to publish preliminary data on fourth quarter economic growth. The nation is also to release the weekly report on initial jobless claims and data on pending home sales. Market players continued to monitor liquidity conditions in emerging markets, such as Turkey and South Africa. Technically market is getting support at 122.4 and below same could see a test of 121.5 level, And resistance is now likely to be seen at 124.4, a move above could see prices testing 125.5.

Trading Ideas:

Zinc trading range for the day is 121.5-125.5.

Zinc dropped on worries about demand from top consumer China following data showing slowing factory activity there.

LME cancelled warrant for zinc has declined from 546,600 MT to 277,525MT which is the lowest levels witnessed in the last two months.

Zinc is forecast to have a 96,000 tonne surplus this year, narrowing to 17,500 tonnes in 2015.