Inflation rises to record 7%

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.

As soon as the figures were out, Banking stocks came under selling pressure and 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.

Adding to the woes of the market was the release of Emerging Markets: Is It Time to Cash In ? by Knowledge @ Wharton which is keeping the bulls away. The report specifically points to Reliance Power IPO – frenzied bidding for IPOs in India of companies with no revenues and earnings; and to the Real Estate Bubble in India commercial and residential real estate prices in major emerging market financial centers exceeding those in New York and concludes by saying gravity will bring stock market valuations back to earth in the emerging markets.