Investors withdraw from bank stocks as inflation surges

Five banking stocks fell between 3.13% to 5.71% after the latest data showed a surge in inflation based the wholesale price index to a three year high of 7%.

The BSE Bankex was down 3.50% at 7,547.04. Kotak Mahindra Bank (down 5.71% at Rs 609), ICICI Bank (down 4.53% at Rs 752.20), Indian Overseas Bank (down 3.53% at Rs 128.50), Axis Bank (down 3.49% at Rs 719.50) and Bank of Baroda (down 3.13% at Rs 274.15), slipped.

Inflation based the wholesale price index rose 7% in 12 months to 22 March 2008, accelerating from the previous week's rise of 6.68%, government data showed today. The rate is the highest reading since 4 December 2004 when it was 7.07%. The annual inflation rate was 6.54% during the corresponding week of the previous year.