* Rupee hits strongest vs USD since Oct 2015
* 10-yr bond yield falls as much as 12 bps
* NSE index down 0.75 pct; IT, drug makers hit
* Reliance Industries down after SEBI action
MUMBAI, March 27 The Indian rupee hit a
nearly 1-1/2 year high against the dollar on Monday, tracking
gains in Asian currencies after U.S. President Donald Trump's
failure to pass a healthcare reform bill raised concerns about
the chances of a U.S. fiscal stimulus.
The Reserve Bank of India stepped in to cap broader gains in
the rupee, traders said, adding that some of the gains were also
due to the strong $6.1-billion foreign investment into debt and
equities this month.
The gains in the local unit spurred by strong dollar inflows
helped spark a rally in bond markets, sending the benchmark
10-year bond yield down as much as 12 basis
points to 6.71 percent, the lowest since Feb. 8 when the central
bank unexpectedly changed its monetary policy stance to
"neutral" from "accommodative."
However, shares fell as software services exporters and drug
makers were hit by worries about the impact of a stronger rupee.
The broader NSE index was down 0.75 percent at 9,039.60
by 0635 GMT, while the benchmark BSE index was 0.69
percent lower at 29,218.19.
Movements in India broadly tracked regional markets after
Trump's inability to get enough support from his own Republican
Party to reform healthcare was seen raising questions about his
ability to push the rest of his agenda.
"Both global and domestic factors are riding the market
today," said Vinod Nair, head of research at Geojit Financial
At 0656 GMT, the rupee was trading at 65.0575 after earlier
strengthening to as much as 65.01 per dollar, the strongest
level since October 2015.
The rally in the rupee sent IT shares lower, with Tech
Mahindra Ltd down 2.2 percent and HCL Technologies Ltd
down 1.9 percent.
Drug makers also fell, with Lupin Ltd and
Aurobindo Pharma Ltd falling 2 percent and 1.8 percent
Among other decliners, Reliance Industries Ltd
fell as much as 2.42 percent after the Securities and Exchange
Board of India accused the company of having committed a "fraud"
in taking a short trading position at the time of selling a
stake in a unit 10 years ago.
Reliance strongly denied the ruling and said it would
Energy major Coal India fell as much as 2.5
percent, as the second interim dividend announced by the mining
firm disappointed investors.
(Reporting by Suvashree Dey Choudhury and Aby Jose Koilparambil
in Bengaluru; Editing by Sunil Nair)