Shares of 14 banks fell by 0.38% to 2.87% at 9:37 IST on BSE as inflation rates rose in November 2013, fuelling concerns of further monetary tightening from the central bank.
ICICI Bank (down 2.87%), IndusInd Bank (down 2.27%), Axis Bank (down 1.84%), Canara Bank (down 1.75%), Yes Bank (down 1.71%), Punjab National Bank (down 1.66%), Bank of Baroda (down 1.55%), Bank of India (down 1.12%), Union Bank of India (down 0.9%), State Bank of India (down 0.71%), Kotak Mahindra Bank (down 0.71%), Federal Bank (down 0.63%), IDBI Bank (down 0.47%) and HDFC Bank (down 0.38%), edged lower.
The S&P BSE Bankex was down 1.48% at 13,071.09. It underperformed the Sensex, which was down 0.53% at 20,814.62.
The S&P BSE Bankex had outperformed the market over the past one month till 12 December 2013, rising 9.81% compared with the Sensex's 3.17% rise. The index had also outperformed the market in past one quarter, gaining 14.64% as against Sensex's 5.78% rise.
Provisional annual inflation rate based on all India general consumer price index (CPI) (combined) rose 11.24% in November 2013 as compared to 10.17% (final) for the previous month of October 2013. The corresponding provisional inflation rates for rural and urban areas for November 2013 are 11.74% and 10.53% respectively. Inflation rates (final) for rural and urban areas for October 2013 are 10.19% and 10.20% respectively. The data was announced after market hours on Thursday, 12 December 2013.
The yield on the benchmark federal paper 7.16% GS 2023 was hovering at 9.2727%, higher than its close of 8.9065% on Thursday, 12 December 2013. Lower bond prices will result in diminution in value of bond holdings by banks. Bond yields and bond prices are inversely related.
The government will unveil data on inflation based on the wholesale price index (WPI) for November 2013 on 16 December 2013. WPI is seen easing a bit at 6.9% in November 2013, from 7% in October 2013, as per the median estimate of a poll of economists carried out by Capital Market.
The Reserve Bank of India (RBI) announces next Mid-Quarter Review of Monetary Policy for 2013-14 on 18 December 2013. The Third Quarter Review of Monetary Policy for 2013-14 is scheduled on 28 January 2014.
RBI, after a monetary policy review on 29 October 2013, raised its main lending rate viz. the repo rate by 25 basis poinst to 7.75%.
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