Banking shares down on reports of bulk diesel in WPI

Banking stocks were seen trading lower after the reports that bulk diesel purchases would be included in WPI thus fueling inflation and reducing hopes of rate cut.

As per Reuters report, India aims to include the bulk price of diesel fuel in its calculation of wholesale inflation as early as February, two government officials with direct knowledge of the matter said, a move that is likely to add upward pressure to the main price index after New Delhi's move last week to deregulate prices.

Indian government decided to partially de-regulate diesel prices, hoping that it will help in reducing fiscal deficit.
Banking stocks surged recently on hopes of rate cut by the Reserve Bank of India on Jan 29, 2013 meet.

However, considering that bulk diesel purchases would be included in WPI, there maybe no agressive rate cuts by the RBI going forward, analysts feel.

Bank of India was lower by 4.18%, Union Bank slipped 3.71%, Canara Bank was down by 2.19% and IDBI dropped by 2.18% on BSE at 2.50 pm IST.

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