MCX base metals recover on global cues

The futures contract of base metals such as copper, nickel, lead and zinc on the Multi Commodity Exchange recovered on Wednesday following buying at lower levels in line with a firm overseas market.

Copper delivery for February rose 1.461 per cent at Rs 290.85 a kg and the January contract of nickel jumped by 2.45 per cent at Rs 1,194.50 a kg.

Base metals were in a subdued state till December 2007, but have started recovering due to a shift in investors' participation from the stock market to commodities. Besides, the spur in demand from China for base metals also supported the rally, analysts said.

"Many investors are shifting to commodities like base and precious metals. Also, many are investing in commodities to hedge against inflation. Many countries are facing inflationary threats and hence traders are heavily showing interest in base metals," Karvy Comtrade Research Head Harish G said. Consequently, the prices of base metals have shot up both in the domestic and overseas markets.

On the other hand, China's inventories have started picking up and this has also supported the prices, he said.

"Base metals were in subdued phase last few weeks. However, they have moved to a recovery mode on Wednesday," Religare Commodities analyst Suganda Sachdeva said.

"We can't say that the current trend is very bullish because, technical buying is seen only at lower levels," she said.