Ten bank shares rose by 1.3% to 3.28% at 12:56 IST on BSE after the latest data showed that the consumer price inflation eased to a 25-month low in February 2014.
Among private bank stocks, Kotak Mahindra Bank (up 3.28%), Axis Bank (up 1.62%) and Yes Bank (up 2.92%) gained.
ICICI Bank rose 1.3% to Rs 1,226.50 after hitting 52-week high of Rs 1,241.25 in intraday trade.
HDFC Bank rose 2.21% to Rs 741.55 after hitting record high of Rs 744 in intraday trade.
Among PSU bank stocks, State Bank of India (SBI) (up 2.93%), Punjab National Bank (up 2.48%), Bank of Baroda (up 2.15%), Bank of India (up 2.49%) and Union Bank of India (up 2.38%) edged higher.
The S&P BSE Bankex was up 264.52 points or 1.93% at 13,988.05. It outperformed the S&P BSE Sensex which was up 72.47 points or 0.33% at 21,928.69.
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The Bankex had outperformed the market over the past one month till 12 January 2014, rising 15.99% compared with the Sensex's 6.88% rise. The index, however, underperformed the market in past one quarter, gaining 3.43% as against Sensex's 4.45% rise.
Inflation based on the consumer price index eased to a 25-month low last month, data released by the government after trading hours on Wednesday, 12 March 2014, showed. The rate of inflation based on the combined consumer price index (CPI) for urban and rural India eased to 8.1% in February 2014, from 8.79% in January 2014. Core CPI inflation, which excludes food and fuel prices fell below the 8% mark for the first time in 7 months. Core CPI inflation stood at 7.9% in February 2014, lower than 8.1% in January 2014. CPI inflation eased for all groups except clothing in February 2014.
The Reserve Bank of India early this week said it will conduct a 21-day term repo variable rate auction for a notified amount of Rs 50000 crore on Friday, 14 March 2014, so as to address the anticipated tightening in liquidity conditions in the banking system on account of advance tax payments by corporates commencing mid-March 2014 and with a view to providing flexibility to the banking system in its liquidity management towards March-end 2014. The reversal will be on 4 April 2014, the central bank said. The auction will be conducted as per the revised guidelines issued on 13 February 2014, the RBI said. There will be no term repo auction on 18 March 2014 when the existing 28-day term repo of Rs 30004 crore matures, the RBI said.
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