MUMBAI, Jan 28 (Reuters) - Indian government bonds fell on Tuesday, while shares retreated, led by a fall in lenders after the Reserve Bank of India unexpectedly raised interest rates by 25 basis points.
The benchmark 10-year bond yield rose 8 basis points to 8.79 percent from levels before the RBI decision, bringing the yield up 2 bps on the day.
Indian shares fell, with the broader NSE down 0.4 percent after being up slightly before the decision. Banks led declines, with ICICI Bank Ltd down 2.1 percent.
The central bank unexpectedly raised its policy interest rate by 25 basis points to 8.00 percent. Most analysts had expected the central bank to keep the rate on hold. (Reporting by Mumbai markets team; Editing by Anand Basu)