BSE's banking sector index Bankex was down 0.45% to 6,493.41 at 15:13 IST ahead of inflation data for 12 months to 19 July 2008, which will be released by the government after market hours today, 31 July 2008.

Meanwhile the BSE Sensex was up 73.30 points or 0.51% to 14,360.51.

Frontline banking counters staged a sharp recovery from early lows. State Bank of India (up 2.26% to Rs 1418, off day’s low of Rs 1344.15), HDFC Bank (up 0.87% to Rs 1102, off day’s low of Rs 1058.10), and ICICI Bank (up 0.35% to Rs 637.50, off day’s low of Rs 621.50), edged higher.

As per street estimates inflation in 12 months to 19 July 2008, which will be released after market hours today may top 12% mark to register fresh 13-year high.

Inflation based on the wholesale price index rose 11.89% in 12 months to 12 July 2008, a tad lower than annual rise of 11.91% in 12 months to 5 July 2008.

The BSE Bankex had outperformed the market over the past one month till 30 July 2008, gaining 16.82% compared to the Sensex’s return of 10.23%. However it underperformed the market in the past one quarter, declining 26.04% compared to Sensex’s decline of 17.35%.

The Reserve bank of India (RBI) hiked cash reserve ratio by 25 basis points and repo rate by 50 basis points at its monetary policy review on Tuesday, 29 July 2008, in an attempt to check runaway inflation