Banking shares have erased their early morning losses and are currently trading higher by more than 1% each after July inflation came down at 6.87% against the analysts expectation of 7.37%, the key to the Reserve Bank of India’s policy stance. In June, wholesale price-based inflation was 7.25%.
Among the individual stocks, State Bank of India, ICICI Bank, Bank of India, Union Bank of India, Bank of Baroda, Punjab National Bank and Yes Bank are up 1-3% on the National Stock Exchange (NSE).
The NSE banking share index, Bank Nifty the largest gainer among sectoral indices is trading higher by 1.3% as compared to 0.53% rise in benchmark Nifty at 1217 hours.
The fall in WPI inflation suggests that the central bank has a scope to ease policy further to keep the economy on track to meet an official 2012-13 growth target of 6.5%.