CNX PSU Bank index up 3%

SBI, Oriental Bank, Bank of India, Andhra Bank, Union Bank, DCB Bank and Federal Bank were up 3-6% on NSE.

Shares of public sector undertaking (PSU) banks were trading higher by up to 7%, bouncing back from their intra-day low on the bourses as wholesale price index based inflation fell to a record low of (-) 2.33% in March on account of cheaper food and fuel products as well as manufactured items.

Inflation measured on wholesale price index (WPI) was at (-) 2.06% in February, (-) 0.39% in January, (-) 0.50% in December and (-) 0.17% in November. It was 6% in March 2014, the PTI report suggests.

IDBI Bank has rallied 7%, Oriental Bank of Commerce surged 6% each, while Bank of India up 5% on the National Stock Exchange (NSE).

State Bank of India (SBI), Union Bank of India, Syndicate Bank, Andhra Bank, Indian Overseas Bank, Canara Bank, Punjab National Bank and Bank of Baroda were up 2%-3%.

At 1416 hours, CNX PSU Bank index was up nearly 3% and Bank Nifty by 1% compared to 0.10% decline in the CNX Nifty.

DCB Bank, Federal Bank, YES Bank, Kotak Mahindra Bank, IndusInd Bank and ICICI Bank from the private sector lender were up 1%-6% on the NSE.

India's wholesale price index-based inflation (WPI) provisionally stood at -2.33% for March, government data showed on Wednesday. This compares with -2.06% for February and 6% for the same period last year. This is the fifth consecutive month of deflation in wholesale prices, a clear reflection of lower commodity prices.

Given the sharp disinflation process prevailing in the economy, analysts at Edelweiss Securities reiterate call of another 75bps easing in FY16 with mild downside risks.

The March CPI print is very comforting. The sequential momentum in food as well as core is very reassuring and points towards sharp disinflation going ahead. With regards to the trajectory, CPI is expected to move much lower, before bouncing back in H2FY16, said analysts in report dated April 13, 2015.