Banking shares gain as CPI Inflation moderates to a 2-year low

YES Bank, Bank of Baroda, Punjab National Bank, Union Bank of India and Bank of India are up 2-3% on the NSE.

Banking shares are trading higher by up to 3% in early morning deals on the bourses after the Consumer Price Index (CPI) fell to a 25-month low in February and is likely to increase the clamour for the Reserve Bank of India (RBI) to cut interest rates in its next monetary policy.

The combined (rural + urban) CPI inflation moderated further to 8.1% during February 2014 as compared to 8.8% in January 2014.

The RBI to hold monetary policy rates in its forthcoming policy on April 1, 2014 and until there is a sustained downtrend in headline CPI inflation below the 8.0%-level, the analyst at Angel Broking said in a note.

YES Bank, Bank of Baroda, Punjab National Bank, Union Bank of India and Bank of India are up 2-3%, while ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank, Canara Bank and State Bank of India are up 1-2% on the National Stock Exchange (NSE).

The NSE banking share index, Bank Nifty was up 1.2% as compared to 0.11% rise in benchmark CNX Nifty at 0925 hours.