RTRS: Indian rupee hits 1-wk high on shr gains, weak dlr
* Dollar's fall against majors boosts rupee sentiment
* More than 1 pct early gains in local shares support
* NTPC share sale proceeds eyed, may push up rupee further (Updates to mid-morning)
MUMBAI, Feb 3 (Reuters) - The Indian rupee strengthened to more than one week's high on Wednesday, tracking gains in local shares, with expectations of dollar inflows from a state-run firm's share sale also supporting.
At 10:45 a.m. (0515 GMT), the partially convertible rupee INR=IN was at 46.09/10 per dollar, its highest since Jan. 25, and 0.3 percent stronger than its 46.22/23 close on Tuesday.
"The rupee is tracking the equity market, dollar index and follow-on offers related flows," the chief dealer at a large private sector bank said.
"The rupee should test the 46 level in the next couple of days," he added.
State-run NTPC Ltd (NTPC.BO: Quote, Profile, Research), India's largest power producer, opens a follow-on share sale on Wednesday to raise at least $1.8 billion. The issue closes on Feb. 5. [ID:nSGE61102D]
"For today, let us stay tuned to 46.05-46.25 and watch EUR/USD at 1.39-1.40 and SENSEX at 16,100-16,350," said J. Moses Harding, head of global markets at IndusInd Bank.
"We would not be surprised to see the RBI (Reserve Bank of India) providing support to greenback at 45.80-46.00, hence importers could hedge near-term payables there," he added.
The central bank usually buys or sells dollars via state-run banks to curb volatility in the foreign exchange market.
Gains in other Asian currencies were also helping the rupee. See [EMRG/FRX] for a snapshot on Asian units.
Indian shares .BSESN were trading more than 1 percent higher on Wednesday, led by gains in metals makers on higher base metal prices and supported by rise in world equities on upbeat U.S. corporate earnings. [.BO]
Foreign fund investments into local shares are a key driver for the market and the rupee. Foreigners have been net sellers of $2 billion worth of stocks in 12 of the last 14 trading sessions.
The U.S. dollar slipped further from six-month highs against a basket of currencies on Wednesday, as investors picked up bargains in beaten down growth-linked currencies with risk appetite showing some signs of recovering. [USD/]
One-month offshore non-deliverable forward contracts PNDF were quoted at 46.06/16, little changed from the onshore spot rate.
In the currency futures market INRFUTURES, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX were both quoting at 46.1525, with the total traded volume on the two exchanges at about $1.1 billion. (Reporting by Swati Bhat; Editing by Malini Menon)
