Stock markets head for 2-1/2 month closing high; HDFC Bank, Lupin lead

MUMBAI (Reuters) - India's stock markets rose on Friday to head towards their highest close in 2-1/2 months as HDFC Bank Ltd rose on relative valuations, while drugmaker Lupin Ltd rose after an acquisition in Russia.

Local shares are also headed for a third consecutive weekly gain on value buying by domestic investors with a Greece default already factored in, while better-than-expected progress of the monsoon also helped sentiment.

April-June earnings, expected to begin on a subdued note with some disappointment from IT companies, could be the next key trigger.

"June-quarter would only see a marginal improvement on a sequential basis as seen in core sector growth and tax collections," said G. Chokkalingam, founder of Equinomics, a Mumbai-based research and fund advisory firm.

Earnings would be led by private banks and capital goods, he added.

The 30-share BSE Sensex rose 0.58 percent and the 50-share Nifty gained 0.48 percent, heading towards their highest close since April 17.

For the week, the Nifty is up 1.2 percent while the BSE Sensex is 1.1 percent higher.

Rains for the 2015 monsoon season so far were 13 percent above normal at 194.6 millimetres, easing concerns that food inflation will quicken in Asia's third-largest economy.

However, Asian shares fell as Chinese stocks extended their plunge and growing caution ahead of Greece's referendum prompted investors to cut risky bets, while disappointing U.S. employment data weighed on the dollar.

HDFC Bank rose 1.1 percent and was among the top gainers on the broader Nifty.

Lupin rose 1.8 percent after it acquired pharmaceutical company Biocom in Russia.

Value-buying was also seen in beaten-down software stocks. Tata Consultancy Services rose 0.6 percent, while Infosys was up 0.4 percent.

(Reporting by Abhishek Vishnoi; Editing by Prateek Chatterjee)