By Anil Varma March 30 (Bloomberg) -- India’s rupee rose to its strongest level in 16 months on optimism the nation’s economic recovery will boost company earnings, encouraging overseas investors to raise their holdings of local shares. Funds based abroad raised their ownership of Indian equities to an all-time high of $76.7 billion on March 26, according to data released by the Securities & Exchange Board of India. The Sensitive Index of stocks traded near a two-year high. Indian firms are due to publish financial results in April for the fiscal year that ends tomorrow. “Stock gains continue to drive the rupee higher, with the corporate results season about to begin,” said Roy Paul, a deputy general manager at Federal Bank Ltd. in Mumbai. “Companies are expected to have done well, taking advantage of the economic recovery. Capital inflows remain healthy.” The rupee climbed as much as 0.2 percent to 44.88 per dollar, the highest level since Sept. 10, 2008, and traded little changed at 44.97 as of 11:17 a.m. in Mumbai, according to data compiled by Bloomberg. The currency has strengthened 3.5 percent so far this year, the third-best performance among Asian currencies after Malaysia’s ringgit and the Indonesian rupiah. Offshore contracts indicate bets the rupee will trade at 45.00 to the dollar in a month, compared with expectations of 46.55 at the end of last year. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are settled in dollars rather than the local currency. Appreciation Forecast India’s $1.2 trillion economy, Asia’s third biggest after Japan and China, may expand 8.2 percent in the fiscal year that starts April 1, compared with 7.2 percent this year, the Finance Ministry said last month. --Editors: Ven Ram, Simon Harvey %INR RBI@IN To contact the reporters on this story: Anil Varma in Mumbai at avarma3@bloomberg.net. To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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