Bank stocks rally on rate cut expectations

Thirteen bank shares rose 0.88% to 4.32% at 14:13 IST on BSE as the latest data showing further easing of inflation in May 2013 triggered expectations that the central bank may cut its key policy rate at mid-quarter monetary policy review on Monday.

Yes Bank (up 4.32% at Rs 476), Canara Bank (up 3.31% at Rs 393.50), Union Bank of India (up 3.03% at Rs 214.05), Axis Bank (up 2.46% at Rs 1,300.10), ICICI Bank (up 2.45% at Rs 1,094), Punjab National Bank (up 2.24% at Rs 737.20), Kotak Mahindra Bank (up 1.94% at Rs 757.30), Bank of Baroda (up 1.9% to Rs 636.40), IDBI Bank (up 1.66% at Rs 76.45), Bank of India (up 1.43% to Rs 284.60), State Bank of India (up 1.37% at Rs 2,047.50), HDFC Bank (up 1.17% at Rs 663.35) and Federal Bank (up 0.88% at Rs 425.75), edged higher.

The S&P BSE Bankex was up 246.10 points or 1.84% at 13604.99. It outperformed the S&P BSE Sensex which was up 311.43 points or 1.65% at 19,138.59.

The Bankex index had underperformed market over the past one month till 13 June 2013, sliding 7.11% compared with the Sensex's 4.39% fall. The index had, however, outperformed the market in past one quarter, falling 1.16% as against Sensex's 2.77% decline.

The Central Statistics Office (CSO) today, 14 June 2013, said inflation based on the wholesale price index (WPI) eased further to 4.7% in May 2013 from 4.89% in April 2013. Build up inflation rate in the financial year so far was 0.88% compared to a build up rate of 1.80% in the corresponding period of the previous year. WPI inflation for March 2013 was revised downwards to 5.65% from 5.96% reported earlier.

Core inflation or non-food manufacturing inflation eased further to 41-month low of 2.35% in May 2013, the latest data showed.

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