By Abhishek Vishnoi
MUMBAI (Reuters) - The BSE Sensex rose on Tuesday as a recovery in the rupee from a record low in the previous session boosted blue-chips such as HDFC Bank, highlighting how the fortunes of the currency have become a determining factor across markets
Late on Monday, the Reserve Bank of India banned banks from proprietary trading in domestic currency futures and options, while the Securities and Exchange Board of India (SEBI) doubled the margin requirement on domestic dollar-rupee forward trade.
That sent the rupee higher, easing some of concerns that a falling currency would erode foreign investors' holdings, sparking more outflows at a time when overseas funds are already exiting from emerging markets due to the potential early end to the U.S. monetary stimulus.
Investors are now gearing up for a new earnings season that kicks off on Friday with Infosys Ltd results.
Aggregate net profit for India's benchmark BSE index constituents is expected to grow by 1.5 percent and revenue by 3.85 percent for the April-June quarter, according to a median estimate of 12 brokerages.
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"Equity would trail rupee's movement because inflation, rate cuts, earnings, all depends on it now," said Vivek Mahajan, head of research at Aditya Birla Money.
The benchmark BSE index rose 0.59 percent, or 114.71 points, to end at 19,439.48, turning positive for 2013.
The broader NSE index rose 0.82 percent, or 47.45 points, to end at 5,859.00, closing above its 200-day moving average.
Recent underperformers gained. HDFC Bank rose 1.5 percent while Reliance Industries Ltd rose 0.9 percent.
Investors also parked money in pharmaceutical and consumer shares which are traditionally considered defensive, amid rupee volatility and uncertainty around pending earnings season.
Sun Pharmaceutical Industries Ltd rose 3.6 percent while Dr.Reddy's Laboratories Ltd ended 1.6 percent higher.
Among consumer stocks, United Spirits Ltd rose 3.3 percent while ITC Ltd ended 0.2 percent higher, marking its fifth day of gains.
Titan Industries Ltd gained 2.5 percent after Goldman Sachs upgraded the stock to "buy" from "neutral", saying the jewellery retailer is "sufficiently" capitalised to buy gold without too much leverage, while its growth is being supported by additional stores and "resilient" wedding and discretionary demand.
Infosys shares rose 1.2 percent ahead of April-June earnings.
Shares in Reliance Power Ltd gained 6.3 percent after investors sharply pared short positions in July futures.
However, among stocks that fell, Reliance Communications Ltd shares ended 1.9 percent lower on profit-taking after touching a 2-1/2 year high on Monday.
(Editing by Sunil Nair)