Fresh buying seen in Aluminium, open interest up 8.29%

Aluminium settled up 0.36% at 126.3 as prices recovered later on better-than-expected New York Fed manufacturing data. Base metals prices consolidated overnight on mixed economic indicators. Japan's Q3 growth unexpectedly slid, and European Central Bank President Draghi stated they will push additional easy measures. Mixed economic indicators from the US kept investors cautious. US industrial production edged down 0.1% MoM in October again after picking up in September.

Manufacturing production, however, rose 0.2% MoM for the same month even as the mining, public service and automobile manufacturing sectors encountered declines. European Central Bank (ECB) President Mario Draghi reiterated that the ECB should adopt other unconventional stimulus measures including government bond purchases should the euro zone economic outlook deteriorate. He added that member states in the single currency area should agree on specific short-term structural reforms as soon as possible. Japan’s GDP fell at a real rate of 1.6% YoY in Q3 after contracting 7.3% in Q2.

Many economists point out that two consecutive months of contraction suggest recession in the economy. Amid the disappointing economic figures, markets expect the Japanese government to delay a new round of consumption tax hike which was raised from 5% to 8% on April 1. Technically market is under fresh buying as market has witnessed gain in open interest by 8.29% to settled at 7528 while prices up 0.45 rupee, now Aluminium is getting support at 125.2 and below same could see a test of 124 level, and resistance is now likely to be seen at 127.3, a move above could see prices testing 128.2.

Trading Ideas:
--Aluminium trading range for the day is 124-128.2.
--Aluminium gained as prices recovered later on better-than-expected New York Fed manufacturing data
--Aluminium stocks held at three major Japanese ports were 332,200 tonnes at the end of October, up 6 percent from 313,400 tonnes a month earlier
--Aluminium daily stocks at Shanghai exchange came up by 8300 tonnes.

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