Eighteen bank stocks rose by 1.31% to 4.19% at 11:35 IST on BSE as a sharp cut in diesel prices after government's diesel deregulation could help in further deceleration of inflation.
Meanwhile, the BSE Sensex was up 387.68 points or 1.48% at 26,496.19.
Among PSU bank stocks, State Bank of India (SBI) (up 2.03%), Canara Bank (up 1.94%), Union Bank of India (up 2.9%), Bank of India (up 2.21%), Punjab National Bank (up 3.23%) Syndicate Bank (up 1.79%), Indian Overseas Bank (up 1.96%), Andhra Bank (up 3.62%), Oriental Bank of Commerce (up 4.19%), Dena Bank (up 2.05%), and Indian Bank (up 2.53%), gained.
Among private sector banks, ICICI Bank (up 1.67%), IndusInd Bank (up 1.31%), Yes Bank (up 2.64%), Federal Bank (up 2.58%), Kotak Mahindra Bank (up 2.62%) and HDFC Bank (up 1.59%) gained.
Axis Bank rose 2.89% after the bank's net profit rose 18.23% to Rs 1610.71 crore on 12.53% growth in total income to Rs 10549.97 crore in Q2 September 2014 over Q2 September 2013. The bank announced Q2 results after market hours on Friday, 17 October 2014.
After a Cabinet meeting on Saturday, 18 October 2014, Finance Minister Arun Jaitley announced that diesel price stood deregulated to allow it to move as per market conditions, just like petrol. Following this, Indian Oil Corporation (IOCL) announced reduction in diesel price by Rs 3.37 per litre (including VAT) in Delhi with corresponding decrease in other States from 19 October 2014.
The movement of prices in international oil market and rupee dollar exchange rate shall continue to be closely monitored and developing trends of the market will be reflected in future price changes in diesel prices, IOCL said.
The sharp fall in diesel prices could help in further deceleration of inflation, thus giving elbow room for the Reserve Bank of India (RBI) to cut policy rates to revive economic growth. Diesel is the main fuel for transporters and directly affects the retail price of items ranging from foodstuffs to white goods that are transported across cities
The RBI undertakes its fifth bi-monthly monetary policy on 2 December 2014. The RBI in its fourth bi-monthly monetary policy review on 30 September 2014, kept repo rate under the liquidity adjustment facility (LAF) unchanged at 8%.
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. The CPI guides RBI's monetary policy decision.
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