The BSE Bankex was down 2.04% at 8,045.54. It underperformed the BSE Sensex, which was down 1.25% at 15,218.81
State Bank of India (down 3.32%), HDFC Bank (down 1.40%), ICICI Bank (down 0.87%), Bank of India (down 2.86%), Kotak Mahindra Bank (down 3.26%), Punjab National Bank (down 2.49%), Axis Bank (down 0.93%), and Indian Overseas Bank (down 1.79%), declined
Bond yield rose to a two-month high today, 12 June 2009 after an unexpected rise in industrial output in April2009 from a year earlier, suggesting the economy is turning around faster than expected.
At 12:56 IST, the yield on the benchmark 10-year bond was at 6.94%, the highest since 8 April 2009, from 6.88% before the data. It had ended at 6.89% on Thursday. The yield on the most traded 6.07% bond maturing in 2014 was at 6.64%. It rose to 3 basis points to 6.69% after the data was released. It had ended at 6.63% in the previous session.
Bond yields and bond prices are inversely related. Industrial production rose 1.4% in April 2009 compared to an upwardly revised 0.75% fall in March 2009, government data released today, 12 June 2009 showed. Manufacturing production rose 0.7% in April 2009.
Interest rates in India are falling thanks to ample liquidity in the banking system, low headline inflation and a loose monetary policy stance of the Reserve Bank of India. However, inflation may rise if oil and metal prices which have risen sharply in 2009 continue to rally.
Finance minister Pranab Mukherjee on Wednesday said banks should provide credit at reasonable rates to spur growth, saying cuts in official rates by the Reserve Bank of India had not been passed on. This will help restore the environment for rapid growth and ensure that the growth process benefits, he said.