Bank shares rose on expectations for a cut in the Reserve Bank of India's key policy rate next month.
Among private sector banks, Yes Bank (up 1.38%), Axis Bank (up 1.05%), IndusInd Bank (up 0.81%), City Union Bank (up 0.68%), Federal Bank (up 0.62%), ICICI Bank (up 0.43%) and Kotak Mahindra Bank (up 0.11%), edged higher. HDFC Bank was down 0.18%.
Among state-run banks, Bank of India (up 2.08%), Punjab National Bank (up 1.70%), UCO Bank (up 1.65%), Vijaya Bank (up 1.60%), Syndicate Bank (up 1.46%), State Bank of India (up 1.43%), Canara Bank (up 1.30%), IDBI Bank (up 1.24%), Union Bank of India (up 1.24%), United Bank of India (up 1.04%), Indian Bank (up 0.94%), Bank of Baroda (up 0.78%), Dena Bank (up 0.71%), Allahabad Bank (up 0.58%) and Bank of Maharashtra (up 0.52%), edged higher. Andhra Bank (down 0.39%), Central Bank of India (down 0.58%), Corporation Bank (down 0.71%) and Punjab and Sind Bank (down 1.14%), edged lower.
At 11:40 IST, the BSE Bankex was up 0.49% at 17,472.29. It outperformed the Sensex, which was down 0.64% at 24,646.11.
The Bankex had outperformed the market over the past one month till 14 March 2016, rising 9.66% compared with 7.91% rise in the Sensex. The index had, however, underperformed the market in past one quarter, falling 6.77% as against Sensex's 1.38% fall.
Data showing headline retail inflation eased in February gave rise to expectations for a cut in the central bank's key policy rate next month. The Reserve Bank of India (RBI) is widely expected to cut repo rate by 25 basis points when it announces its policy statement on 5 April 2016.
On the macro front, the latest data showed that inflation based on the consumer price index (CPI) dipped to four month low of 5.18% in February 2016 from 5.69% in January 2016. The decline was due to easing of food price inflation. The Consumer Food Price index (CFPI) eased sharply to 5.3% in February 2016 from 6.85% in January 2016. The core CPI inflation rose to 4.77% in February 2016 from 4.5% in January 2016. The RBI closely tracks retail inflation to set its interest rate policy.
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