Banks fall on inflation worries

Moody's downgraded Axis Bank, ICICI and HDFC Bank earlier in the day

Banking shares fall after higher-than-expected inflation data dents hopes for a rate cut.

The NSE's bank index falls 1.6%; ICICI Bank losing 0.9%, HDFC Bank down 1.6%, and Axis Bank down 1.6% down.

Also hitting sentiment was Moody's downgrade of the financial strength ratings (BFSR) of the above three banks.

However traders say banks could be supported by expectations the RBI will inject liquidity via open market operations or a cut in the cash reserve ratio.