Indian stocks climbed as concerns over Britain’s exit from the European Union eased and measures announced by the government to attract investment bolstered sentiment dented by the central bank governor Raghuram Rajan’s impending departure.
The S&P BSE Sensex climbed 0.91%, or 241.01 points, to 26,866.92 at the close in Mumbai, erasing an intraday drop of 0.7%. 
The Nifty 50 fell 0.84%, or 68.30 points, to 8,238.50. Airlines and defence-equipment makers rose after the government eased foreign direct investment rules.
The rupee pared its decline as traders said state banks sold the dollar on behalf of the central bank after the currency slid to a one-month low.
“The government has given confidence to investors that it will fast-track reforms that are critical for growth of the economy,” Lancelot D’Cunha, chief executive officer at Crest Wealth Management, said by phone from Mumbai. “Fears of Britain’s exit from the European Union are ebbing. 
A combination of FDI reforms and the easing of concerns over Brexit overshadowed worries about Rajan’s exit.” D’Cunha said he’s bullish on consumer companies including automakers and jewellery retailers.
Stocks fell at opening bell as Rajan’s exit coincides with a turbulent phase, where concern about the UK leaving or staying with the EU has roiled global markets. 
The first opinion survey taken after the murder of opposition lawmaker Jo Cox showed the campaign for the UK to stay in the EU was gaining momentum. The Stoxx Europe 600 Index headed for its biggest gain since August and emerging-market shares advanced for a second day.
“At the moment, Brexit is more important than Rajan’s exit,” said Manish Sonthalia, who manages $800mn as head of equities at the portfolio management services division of Motilal Oswal Asset Management Co in Mumbai. 
“We’re set for a rally if Brexit doesn’t happen. The undertone is positive.” He’s bullish on consumer companies, non-state banks and non-banking finance companies.
The Sensex has risen 17% since hitting a 21-month low in February and is up 2.9% in 2016, as forecasts for the strongest monsoon rain in two decades and India’s world-beating economic growth lured $2.8bn in inflows from foreign funds this year. 
Overseas funds have bought $636mn of shares in June, set for the fourth month of purchases, data compiled by Bloomberg show. Larsen and Toubro, the top engineering firm, climbed 1.8%, its first advance in three days. 
Tata Motors, owner of Jaguar Land Rover, jumped 3.8% in a fifth day of advances. Tata Steel, the biggest producer of the ally, surged 3.3%.
Tata Consultancy Services and Infosys, the largest software makers that earn about a quarter of their revenue from Europe, rose at least 2.2%.
Bharat Electronics, whose products include naval systems, climbed 2.2%. BEML, a producer of missile launchers and armored vehicles, rallied 3.8%. Zen Technologies, which sells training simulators to the armed forces, surged 7.7%. Astra Microwave Products, a maker of communications products, rallied 3.5%. Reliance Defence and Engineering soared 7.7%.
SpiceJet climbed 7.4%, while InterGlobe Aviation, the operator of India’s biggest airline IndiGo, rallied 5.8%. Jet Airways India Ltd jumped 6.6%. Meanwhile the rupee yesterday recouped some of its losses on talk that the Reserve Bank of India (RBI) sold dollars through public sector banks to stem the currency’s fall.
But the rupee remained weak on persistent worries that volatility will escalate after central bank governor Raghuram Rajan announced his exit over the weekend.
The currency closed at 67.32 per dollar, down 0.35% from its previous close of 67.09. In morning trade, the local currency fell as much as 0.9% to touch a low of 67.69 a dollar—a level last seen on 24 May.
India’s 10-year bond yield closed lower for the fifth consecutive session at 7.496%, compared with Friday’s close of 7.502%.
Currency dealers are expecting the RBI to step in to check the volatility as it has done in the past, and this could limit the rupee’s weakness.
“Of course, markets will be weaker on Monday and traders would take advantage to bring down the rupee, but I guess the RBI will be watching as well,” Jayesh Mehta, head of treasury at Bank of America-Merrill Lynch, said in an interview over the weekend.
So far this year, the rupee has weakened 1.72%, while foreign institutional investors (FIIs) have bought $2.82bn from the local equity market and sold $1.11bn in debt markets.
Most Asian currencies, stocks rallied with the UK equities futures and the pound surged by the most since 2009 amid signs that Britons are becoming more supportive of staying in the European Union in the run-up to a referendum on Thursday. 
The yen slumped with treasuries and gold as haven assets fell out of favour, Bloomberg reported.
The South Korean won gained 1.06%, Malaysian ringgit 0.94%, Indonesian rupiah 0.66%, Philippines peso 0.42%, Singapore dollar 0.4%, Taiwan dollar 0.39%, Thai baht 0.17% and China offshore rose 0.11%. However, Japanese yen was down 0.41%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 93.69, down 0.54% from its previous close of 94.206.