Banking shares gain post IIP, Inflation data

Banking shares are trading higher by up to 4% on the bourses after the IIP numbers have given a positive surprise with a growth of 2% for the month of February 2016.

Retail inflation, measured by the Consumer Price Index (CPI), also eased to a six-month low of 4.83% cent in March from 5.26% in February, according to data released by the Central Statistics Office (CSO) on Tuesday after market hours.

At 09:54 am, the Nifty Bank and Nifty PSU Bank index were up 2% each as compared to 1.3% rise in the Nifty 50 index on the National Stock Exchange (NSE).

ICICI Bank, State Bank of India, Kotak Mahindra Bank and Union Bank of India were up more than 2% each, while Bank of Baroda, Axis Bank, Punjab National Bank, HDFC Bank, Yes Bank, Oriental Bank of Commerce, Allahabad Bank, Andhra Bank and Bank of India up 1%-2% on the NSE.

“Though there were already expectations of falling inflation and hence the Reserve Bank of India (RBI) had offered 25 bps rate cut in the recent policy meet this paves way for further easing of rates during the rest of the year. We expect the RBI has room for another 25 bps rate cut in the months to come. However, that would be possible only after further reduction in lending rates by the Banks,” Angel Broking said in a client note.

CRISIL Research expect the pickup in consumption next fiscal to push capacity utilisation rate higher and revive the capex cycle by the second half of FY17. RBI business expectation survey indicates a turnaround in current and future business expectations.

For FY17, CRISIL expects industry GDP to pick up further and grow at 7.6% driven by manufacturing and construction sectors.