Twelve bank stocks rose by between 0.14% to 1.24% at 11:15 IST on BSE on hopes the central bank may cut policy rates to revive growth after inflation based on the combined consumer price indices for urban and rural India eased sharply in September.
Meanwhile, the BSE Sensex was down 141.10 points, or 0.01%, to 26,385.66.
Among PSU bank stocks, State Bank of India (SBI) (up 1.24%), Union Bank of India (up 1.26%), Bank of India (up 0.16%), Punjab National Bank (up 0.14%) Syndicate Bank (up 0.79%), Andhra Bank (up 0.37%), Oriental Bank of Commerce (up 1.09%), and Dena Bank (up 0.68%), gained. Canara Bank (down 0.68%), Indian Overseas Bank (down 0.6%), and Indian Bank (down 0.43%) declined.
Among private sector banks, Yes Bank (up 0.51%), Federal Bank (up 0.29%), Axis Bank (up 0.7%), and IndusInd Bank (up 0.81%) gained. ICICI Bank (down 0.99%), Kotak Mahindra Bank (down 0.4%) and HDFC Bank (down 0.72%) declined.
The BSE Bankex had underperformed the market over the past one month till 13 October 2014, falling 3.62% compared with Sensex's 2.5% decline. However, the index had outperformed the market in past one quarter, rising 8.38% as against Sensex's 5.43% rise.
The annual rate of inflation based on the combined consumer price indices (CPI) for urban and rural India eased to 6.46% in September 2014, from 7.73% in August 2014, data released by the government after trading hours yesterday, 13 October 2014, showed. The rate of inflation based on the combined consumer food price indices (CFPI) for urban and rural India eased to 7.67% in September 2014, from 9.35% in August 2014, the data showed. Core CPI inflation which excludes food and energy prices, eased to 5.9% in September 2014, from 6.82% in August 2014.
The moderation in CPI has provided much needed elbow room to the Reserve Bank of India (RBI) to cut policy rates to revive growth.
RBI's fifth bi-monthly monetary policy statement is scheduled on 2 December 2014. The RBI had kept policy rates unchanged in its fourth bi-monthly monetary policy review on 30 September 2014.
Industrial production (IIP) growth remained subdued at 0.4% in August 2014 compared with 0.4% (revised) increase in July 2014 as per data released on Friday, 10 October 2014. The manufacturing sector's output declined for second straight month at 1.4%, mainly contributing to the subdued IIP growth in August 2014. However, mining sector output increased 2.6%, while electricity generation posted a double-digit growth for the third straight month, at 12.9%, in August 2014.
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