By Anoop Agrawal July 20 (Bloomberg) -- India’s rupee rose the most in almost two months on speculation gains in local stocks will attract more funds into the region as corporate earnings improve and a global recession eases. The rupee climbed to its highest level in almost two weeks after Tata Consultancy Services Ltd., India’s largest software exporter, on July 17 reported a quarterly profit that beat analysts’ estimates. Overseas funds, that have bought $6.1 billion more local stocks more than they sold this year, may increase purchases after the Bombay Stock Exchange’s Sensitive Index rose to the highest level in more than a month. “Indian companies’ earnings are increasing optimism for investors abroad,” said Vikas Babu, a trader at state-owned Andhra Bank in Mumbai. “The rupee can accelerate its pace of gains.” The rupee rose 1.1 percent, the most since May 29, to 48.1975 a dollar at 5 p.m. in Mumbai, according to data compiled by Bloomberg. That is the highest close since July 3. Shares rallied across the region today after a U.S. report showed housing starts in the world’s biggest economy unexpectedly increased in June, adding to evidence a global recession that drove funds from emerging markets is easing. The MSCI Asia-Pacific Index of shares climbed 1.5 percent adding its last week’s 2.7 percent advance. Tata Consultancy on July 17 reported net income gained 23 percent to 15.2 billion rupees ($314.7 million) in the three months ended June 30. That beat the 12.9 billion rupee estimate of analysts surveyed by Bloomberg. Upgrading Estimates HSBC Asset Management (India) Pvt. Ltd. may upgrade local earnings estimates after companies report higher-than-expected figures for the second quarter on a rebound in demand. Analysts may raise their estimates for the year ending March 31, 2010, to growth of between 6 percent and 8 percent, compared with the current “flat to negative” projections, said Tushar Pradhan, who manages $1.8 billion of funds for Indian customers as chief investment officer at HSBC Asset Management. India will get a larger share of capital flows in the region should demand for riskier assets increase, said Murthy Nuni, managing director of Marshal Fund Partners Pte. “The rupee will continue to be guided by flows into the domestic equity market and global risk appetite,” Singapore- based Nuni said. “Both were favorable in the past few months and that’s why we saw the rupee appreciating. We expect that to continue for the rest of the year, assuming that global risk appetite will continue to improve.” The local currency may strengthen to 45 per dollar in the next one year, Nuni said. Offshore forward contracts indicate traders predict the rupee will decline to 48.25 in a month, compared with expectations for a rate of 48.81 on July 17. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are used for currencies that aren’t freely convertible and are settled in dollars. To contact the reporter on this story: Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net.

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