Surprise Indian rate hikes hits banks

ICICI Bank (IBN -3.9%) and HDFC Bank (HDB -4.4%) tumble after India's new central bank head unexpectedly hikes the benchmark rate to 7.5% from 7.25%, citing the need to bring inflation down. It's the first boost to rates in two years.

Amid that tightening in policy, however, the bank also eased other restrictive measures put in place over the summer to try and stem the rupee's decline (it's up 8% vs. the dollar in September).

The Sensex closed down 1.9%.

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