Banking shares gain as inflation eases in June

Syndicate Bank, ICICI Bank, BOI, Union Bank, IOB and Canara Bank are up over 3% each on NSE.

Banking shares are trading higher by up to 6% in early morning deals on National Stock Exchange (NSE) after consumer price index (CPI)-based inflation fell to 7.31% in June, the lowest since its launch in January 2012.

Its wholesale counterpart declined to a four-month low of 5.43% in the month and wholesale price inflation eased to a four-month low in June after the new government curbed farm exports.

Syndicate Bank has surged 6%, while ICICI Bank, Bank of India and Canara Bank rallied 3% each on NSE. State Bank of India, Bank of Baroda, Axis Bank, Federal Bank, YES Bank and Punjab National Bank are up 2% each.

The NSE banking index Bank Nifty has surged 1.7% compared to 0.90% rise in benchmark CNX Nifty at 0950 hours.

However, despite of easing inflation, experts felt the Reserve Bank of India was likely to keep rates as they are in its policy review next month, given the fear of a sub-normal monsoon and geopolitical uncertainty, the Business Standard report suggests.