* Rupee up 8 percent from lifetime low in early March * Morgan Stanley revises up stock, growth projections * Bond yields drop at open, stake sales seen to fund deficit (Adds details) MUMBAI, May 18 (Reuters) - The Indian rupee strengthened past 49 per dollar for the first time in three months and turned positive for the year on Monday, after the ruling coalition scored a clear victory in the general elections. Benchmark bond yields dropped. Prime Minister Manmohan Singh's coalition defied predictions of a tight election and was only about 11 seats short of an outright majority. [ID:nSP437509] At 9:37 a.m. (0407 GMT), the partially convertible rupee was at 48.36/37 against the dollar, 2.2 percent above Friday's close of 49.41/42. At its intraday high of 48.34, it was up nearly 8 percent from a lifetime low of 52.20 hit in early March. The rupee has benefited from a revival in foreign capital flows into the domestic stock market. Morgan Stanley revised up its economic forecasts and stock market projections after the election victory, which may fuel more inflows. Foreign funds have been net buyers of about $4 billion of shares since mid-March.

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