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Bank stocks gain on rate cut hopes

Capital Market 

Ten bank stocks rose by 0.18% to 2.21% at 11:00 on on hopes of further rate cuts by the central bank after data showed that based on consumer price index dipped to 13-month low in September.

Meanwhile, the S&P Sensex was up 30.94 points or 0.11% at 27,674.13.

Among public sector banks, (up 2.21%), (up 1.04%), State (SBI) (up 1.38%), Union (up 1.3%), (up 1.42%), and (up 1.53%) edged higher.

Among private sector banks, (up 0.24%), (up 0.64%), (up 0.55%), and (up 0.18%) gained. (down 0.05%) and (down 0.24%) declined.

The Bankex had underperformed the market over the past one month till 13 October 2016, falling 4.65% compared with 2.51% fall in the Sensex. The index had, however, outperformed the market in past one quarter, gaining 1.4% as against Sensex's 0.62% drop.

The latest data showed that based on consumer price index (CPI) dipped to 13-months low of 4.31% in September 2016 lower than 5.05% in August 2016. The corresponding provisional rate for rural area was 4.96% and urban area 3.64% in September 2016 as against 5.87% and 4.22% in August 2016. The core CPI inflation moved up to 4.77% in September 2016 from 4.59% in August 2016. The cumulative CPI inflation rose to 5.4% in April-September 2016 compared with 4.51% in April-September 2015. The data was announced after market hours yesterday, 13 October 2016.

In its last policy meeting on 4 October 2016, the Reserve Bank of India (RBI) had cut repo rate by 25 basis points. The next meeting of the newly formed Monetary Policy Committee (MPC) is scheduled on 6 & 7 December 2016 and its resolution will be announced on 7 December 2016. The fall in CPI gives RBI much needed elbow room to cut rates to spur growth.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, October 14 2016. 11:08 IST