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[May 14 to May 19] Equity: Rising Macro Challenges, GAAR Uncertainity To Lower Indices

Losing streak continue on the d-street, last week Nifty 50 spot index closed below psychological level of 5000. It made a low of 4836.70 which confirmed negative biasness.A combination of various

factor such as rising macro challenges , policy paralysis , uncertainty related to foreign taxation(GAAR), monsoon expectation, the Spain debt crisis and muted threat by S&P of a possible rating downgrade in futures battered benchmark indices Nifty below 5000 and Sensex below 17000 level.

But factor like resumption of FII inflows, a correction in crude oil prices and a pause in the rupee fall stem a further downside of the indices in the last trading session of the last week. (nifty made a high of 4976.65 and closed above 4900 level).

The FII turned buyers, they bought equities worth Rs 427.92 crore(provisional data) on friday. In the last week, they bought equities worth of 1224.82 crore.After a RBI intervention, the rupee bounced back. The partially convertible rupee was at 53.34, up 12 paisa against the previous close of 53.48.

On friday NSE index was at 4928.90 down -39.80 or -0.74 %. Nifty broke its horizontal range on downside which is at 4990 level and it also broke the support of 200 DMA. The break of the important support confirmed the strength of the bears in the market.

In coming traidng session if Nifty breaks it support level of 4900 the next support on the way down is 4800 which may act as a final threshold as it is a important support. On the higher side 5120 is the important resistance beyond which bulls may try to take a breather and gain a mild hold on the markets.

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