The Bombay Stock Exchange's Sensitive Index added 6.4 percent on Monday, the most since October 31. The index has rebounded almost 50 percent from a three-year low on March 9.

At its current level of 49.65/66 per dollar, the rupee is up over 5 percent from its record low of 52.2 touched in early March.

The currency has gained almost 1 percent versus the dollar this week, its best monthly performance this year. However, due to defence and oil related dollar buying, the rupee upside is limited and will be prevented from rising beyond 49.50 per dollar.