BSE's banking sector index Bankex had spurted 153.28 points, or 1.92%, to 8,143.76 at 15:25 IST on hopes that interest rates may soften due to lower inflation.

The current level is an all-time high for the Bankex. It had hit a low of 8,019.66 so far during the day. The Bankex had touched a 52-week low of 4,032.39 on 19 July 2006.

State Bank of India advanced 3.21% to Rs 1580, ICICI Bank 1.64% to Rs 966.25, HDFC Bank 0.34% to Rs 1150, Bank of India 0.26% to Rs 228.20, Punjab National Bank 2.55% to Rs 541.80.

ICICI Bank, State Bank of India and HDFC bank have weightages of 40.36%, 17.12% and 13.83%, respectively, in the Bankex.

Bank shares rose today on renewed buying on expectation that nterest rates may soften due to lower inflation. Lower interest rate would lead to higher demand of funds from consumers. Data released late last week showed that the inflation declined to a 14-month low of 4.03% in the week ended 16 June 2007.

The Bankex had risen 4.76% from 7479.15 on 18 June 2007 to 7835.34 on 22 June 2007, following strong response to the follow-on public offer (FPO) of ICICI Bank that was open for subscription for four days between 19 to 22 June 2007.

Earlier, the Bankex had dipped from 7,512.09 on 7 June 2007 to 7,368.69 on 13 June 2007. From that low, it had gained 8.43% to 7990.48 on 2 July 2007.

The Bankex moved up 4.01% over the last one month to 2 July 2007 compared to the Sensex’s return of 0.64%. The index rose 29.24% in past three months compared with the Sensex’s rise of 16.16%.