Nickel rose sharply by Rs. 7.5 on MCX, closing the day at Rs. 598.7. Copper and Zinc also moved slightly north. This rise in base metals defied poor Housing starts and Building permits data but got support from the prevailing optimism about a global recovery very soon.

Lead and Aluminum ended the session marginally lower on MCX as well as on LME. Aluminum 3M contract saw a drop of $20, closing at $1500.

LME copper inventories fell to 348825 tonnes on Tuesday, their lowest since early January. Cancelled warrants -- material set to leave the warehouses -- fell to 57700 tonnes.

The global lead market was in surplus by 33,000 tonnes in the first three months of 2009, the Lisbon-based International Lead and Zinc Study Group's (ILZSG) latest monthly bulletin shows.

New U. S. housing starts and permits unexpectedly fell to record lows in April. The Commerce Department said housing starts fell 12.8 percent to the lowest level on record dating back to January 1959.

Brazil's primary aluminum output, world’s sixth largest, fell 6.6 percent in April to 126,900 tonnes, compared with the same month last year, the Brazilian Aluminum Association said.

Improving U. S. macroeconomic data and indications of China's economic re-inflation should gradually alleviate weak aluminum fundamentals, Goldman said.

Base Metals: In spite of weak housing numbers from U. S., base metals continue to trade firm. The trend is still up but it is more of in a trading range. In Copper, we recommend to book profits on long positions at Rs. 225. Nickel and Zinc still look attractive so one can buy both these metals at dips.

Copper prices have seen a bounce back yesterday but took resistance at 225 levels. Looking at ADX and rising –DI, Copper is expected to move lower in near term.

Zinc prices are moving south-wards in shortterm. However, Zinc is seen trading at the support levels in the medium term. Thus, new buying can come in at this lower levels around 69-71, targeting 78-79 on upside in short-term. MACD is in the positive territory, which is favorable for upward move in Zinc. Thus, one can remain long in Zinc at
70-71, with a Stop loss of 68.5.

Lead is seen consolidating between 69 and 74 for quite a long time. Looking at Positive MACD, lead is expected to break this range on upside and march northwards to 79 levels in the near term. Thus, one can remain long in Lead at 70 levels, with a Stop loss of 68.

Nickel also witnesses a bounce back, however took resistance at 612 level (earlier high). Nickel is expected to trade range bound between 590-612 levels during the day. Breaking 612 levels in Nickel can pull prices upside to 624 levels.