This expectation is strengthened by the fact that US business activity seems to have weakened further in October. An S&P Global Survey has shown that both manufacturing activity and services activity have declined in October, from September levels. US Federal Reserve is bound to show some caution regarding its course of relentless rate hikes. US mid-term elections will take place on November 8th. The Federal Reserve will also feel political pressure to not continue the trade-off between economic growth and inflation in the week leading to elections.
Global cues remain negative. Inflation rate in Britain in September stood at 10.1%. Food price inflation was even higher at 14.1%. Inflation in milk and butter prices, in the country, stood at a whopping 30%. Energy price inflation stood at 70%. Bank of England will start selling short term and mid term bonds that it bought during quantitative easing. This will bring down prices of short term and medium term bonds in the country and increase yields on them.
On the technical front, a Buy call is being given on the stock of State Bank of India for this week. Stop Loss is Rs 560. Target price is Rs 590.
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