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Bank shares plunge after RBI unexpectedly hikes rates

Reuters Market Eye - The Bank Nifty fell as much as 6.6 percent after Reserve Bank of India Governor Raghuram Rajan surprised markets in his maiden policy review on Friday by raising interest rates to ward off rising inflation.

Analysts tracking the sector say this is likely to hit growth further as RBI has chosen inflation over growth in its growth-inflation dynamics.

Among large caps, ICICI Bank (NSI:ICICIBANK.NS - News) shares fall 5.2 percent, while Axis Bank (NSI:AXISBANK.NS - News) drops 6 percent.

Banks dependent on wholesale deposits also fall. Yes Bank (NSI:YESBANK.NS - News) plunges 9 percent, while Indusind Bank (NSI:INDUSINDBK) is down 6.2 percent.

In state-owned banks, State Bank of India falls 5.3 percent, while Bank of Baroda (NSI:BANKBARODA) is down 5.4 percent.

(Reporting by Abhishek Vishnoi)