Negative newsflow of rising inflation and an impending CRR hike as expected by most experts has weighed heavily on markets. The key indices have slipped further; Sensex was down over 450 points and the Nifty down over 120 points on Friday. Inflation for week ended March  22 came in at 7% Vs 6.68%, at a 3-year high.

These bits of news affected Banking sector directly and it was down 3.1%. Kotak Mahindra Bank was among the worst hit bank down by 6.13% followed by YES Bank, Bank of Baroda which were down by 6%. Others following the league were Axis Bank, ICICI Bank, PNB etc which were any where down between 4% to 5%.

According to ICICI Bank there might be CRR hike today. The view from Kotak Mahindra Bank is that more Fiscal measures are required than monetary measures. HDFC Bank’s management  says that Fiscal steps may pull down inflation by 50-60 bps.

Franklin Templeton is of the view that CRR hike cannot be ruled out in addition to fiscal steps. Banks will be under pressure as advances growth has been muted with higher interest rates and slower growth will hurt banking sector. HSBC says expectation of policy measures including CRR hike from RBI.

By- Aniket Vakharia ( with inputs from CNBC-TV18)