Indian shares rose on Monday after two straight sessions of losses on firmer regional markets and lower global oil prices, but the rupee staged its biggest one-day loss since early February on dollar strength overseas. The 30-share Bombay Stock Exchange index rose 0.75 percent to 6,832.68 points. "The index recovered from last week's profit-taking, and there is also a lot of optimism with regard to a settlement at Reliance, and foreign fund flows picking up," said Abhishek Gupta, a trader at Khandwala Securities.
After being net sellers in April and May, foreign funds have bought $385.2 million worth of Indian shares so far in June.
But traders said further upside depended on key US data this week and the advance of India's south-west monsoon after an economic think tank cut its growth forecast to 6.0 percent from 6.6 percent, saying insufficient rains would shrink farm output.
The US May producer price index and consumer price index due this week will offer hints about when the US Federal Reserve will reconsider its policy of steady interest rate increases. Other data due later this week, including retail sales, will help determine the strength of the US economy.
Indian index heavyweight Oil and Natural Gas Corp (ONGC) rose 1.9 percent as Iran signed a major liquefied natural gas export deal with India.
But Geometric Software Solutions Co Ltd fell 9.6 percent after it cut its full-year revenue and profit guidance.
The dollar's rally overseas on positive US data and expectations of more US rate rises pushed the rupee to a one-and-half-week low.
Federal bonds inched up, helped by expectations that the local inflation rate would continue to fall due to a favourable base effect, but dealers said gains were limited by wariness of fresh state government issuances later this week.
The yield on the popular 12-year benchmark bond eased to 6.9865 percent, from Saturday's 6.9931 percent. It hit a three-month low of 6.8195 percent last Wednesday.