Shares rise to near 1-month high on foreign buying

MUMBAI (Reuters) - Indian shares rose to near one-month high on Wednesday as blue chips advanced on resumption of buying by foreign investors, while forecast of a timely monsoon continued to raise hopes the Reserve Bank of India would lower interest rates in June.

Foreign portfolio investors, key behind Indian stocks hitting record high in March, have bought cash shares worth nearly $300 million in the past three days, Thomson Reuters calculations showed. They had sold about $2.5 billion worth of shares over the last four weeks.

Overseas investors had trimmed positions in Indian cash equities but it was still a favoured market, UBS said in a report, citing feedback of 100 investors meeting it conducted globally.

India's weather office said on Thursday it expects monsoons to hit the southern Kerala coast around May 30, a timely arrival for farmers worried about dry weather from an El Nino weather pattern this year.

"Rupee and crude have stabilised and hence their is some comfort from FIIs," said Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance.

But the core of earnings recovery is still weak and that cycle may resume only in FY17, he added.

The benchmark BSE Sensex rose 0.71 percent, while the broader Nifty gained 0.68 percent, after hitting their highest daily level since April 23.

Blue-chip stocks, heavily owned by foreign investors led the gains.

Housing Development Finance Corp rose 1.7 percent, while HDFC Bank gained 1.4 percent.

ICICI Bank rose 1.3 percent, while State Bank of India advanced 2 percent. ($1 = 63.9200 Indian rupees)

(Reporting by Abhishek Vishnoi; Editing by Anand Basu)