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Business News/ Market / Stock-market-news/  Banking shares rise for a third day
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Banking shares rise for a third day

Shares rally on hopes that RBI may cut interest rates in the near future

The BSE Bankex and CNX Bank Nifty touched record highs in Tuesday trade. Photo: Pradeep Gaur/MintPremium
The BSE Bankex and CNX Bank Nifty touched record highs in Tuesday trade. Photo: Pradeep Gaur/Mint

Mumbai: Banking shares rose for the third consecutive day on Tuesday on hopes that the Reserve Bank of India (RBI) may cut interest rates in the near future as lower diesel prices check immediate price pressures and fiscal consolidation eases inflation pressures in the long run.

On Monday, the government approved an ordinance which will end state monopoly on coal and enable commercial mining by private companies. The auction of coal blocks may prevent asset quality pressure from the power sector.

The BSE Bankex and CNX Bank Nifty touched record highs. At 11am, the Bankex was trading up 1.45% at 18,828.27 points, while the CNX Bank Nifty was up 1.4% at 16,450.50 points. The CNX PSU bank index rose 1.4% to 3,609.10 points.

Among public sector banks, Oriental Bank of Commerce rose 3.4%, IDBI Bank Ltd 2.7%, Syndicate Bank 2.5%, Bank of India 2.4%, Allahabad Bank 2.2%, Indian Overseas Bank 2.1%, Canara Bank Ltd 2.1%, Punjab National Bank 2%, Andhra Bank 1.5%, Bank of Baroda 1.2% and State Bank of India 1%,

In the private sector, ICICI Bank Ltd rose 1.6%, Federal Bank Ltd 2.2%, Axis Bank Ltd 1.4% and HDFC Bank Ltd 1.1%.

Bloomberg reported an RBI adviser as saying the central bank may consider cutting rates as early as March due to a fall in inflation, after global oil prices fell to a four-year low.

“The drop in oil prices is a definite positive for India as it will help reduce the deficits and inflationary impulses," Ashima Goyal, a member of the central bank’s technical advisory committee said in a phone interview to Bloomberg. “Various factors are coming together to enable the RBI to support the growth process by lowering interest rates."

India’s consumer price index (CPI)-based inflation eased for the second month in a row to 6.46% in September, compared with a downward revised 7.73% a month ago, driven by lower price increases in food and fuel items.

On 30 September, RBI indicated that it has no intention of moving to a looser monetary policy until it reins in upside risks to the target of lowering consumer price inflation to 6% by January 2016.

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Published: 21 Oct 2014, 12:46 PM IST
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