Bloomberg/Mumbai

Most Indian equities climbed after foreigners boosted holdings of local shares by the most since May as the rupee had its best run in almost a year.

State Bank of India rose to a one-month high, sending a gauge of 13 lenders to a six-week high. Tata Steel Ltd gained for a third day, helping a measure of 10 metalmakers to close at a three-month high. The rupee capped a fifth day of advance, rising 0.8%, the longest streak since October.

About three stocks climbed for every two that fell in the S&P BSE Sensex, which closed unchanged at 19,997.45 even as the measure’s 30-day volatility climbed to a four-year high. Global funds bought a net $421mn of shares on September 10, a fourth day of inflow that fuelled the biggest rally in the Sensex in four years on Tuesday. The currency has rebounded 6.9% in the past five days, the most in at least four decades, as new Reserve Bank of India Governor Raghuram Rajan announced steps on September 4 to boost the supply of dollars.

“Strong buying by foreign funds shows that the undertone is still bullish,” AK Prabhakar, senior vice president of equity research at Anand Rathi Financial Services Ltd, said by phone from Mumbai yesterday.

State Bank increased 3.5% to Rs1,690.05, the highest close since August 7. HDFC Bank Ltd rose 1.5% to Rs647.25, the highest price since July 25. Smaller rivals - - Bank of India, Bank of Baroda and Canara Bank - were among the best performers on the MSCI Emerging Markets Index yesterday.

The S&P BSE Bankex closed at its highest level since July 29. The index has surged 19.5% in five days, the biggest advance since May 2009, amid speculation the central bank may reverse cash-tightening steps taken in July to stem the slide in the rupee, according to Anand Rathi’s Prabhakar. The moves aided a three-month surge in government bond yields.

The rupee rose to 63.3650 per dollar, erasing an intraday loss of 0.6%. It fell to a record low of 68.845 on August 28. Brent oil fell the most since June 20 on Tuesday as the US Senate backed away from a vote authorising a military strike against Syria.

Falling crude costs and a strengthening currency reduces pressure on the nation’s public finances. Standard & Poor’s reiterated last week it may cut India’s BBB- credit rating to junk because of the government’s failure to tackle its fiscal and current-account deficits. Foreign funds pulled $3.7bn from local shares in the three months to August, the most since the global financial crisis in 2008, fuelling the rupee’s slide and worsening the current-account shortfall.

Global funds have still purchased a net $12.2bn of domestic shares this year, the second-highest among 10 Asian markets tracked by Bloomberg.

The Sensex has increased 2.9% this year in local currency terms and is valued at 14.2 times projected 12-month earnings. It has lost 11% this year in dollar terms.