Indian stocks rose to the highest level in more than six months yesterday on speculation the central bank will cut interest rates next week and as a German court cleared the way for a permanent euro-area rescue fund. The BSE India Sensitive Index, or Sensex, increased 0.8% to 18,000.03, the highest close since February 23. The gauge climbed 4% in past six days, the longest streak since January. Data yesterday showed Indian industrial output grew 0.1% in July, less than the 0.5% increase estimated by economists in a Bloomberg survey. Germany’s Federal Constitutional Court rejected today bids to halt the nation’s ratification of the €500bn ($644bn) European Stability Mechanism. Indian commerce ministry data show that the European Union is the nation’s largest trading partner. “The government may pressure the Reserve Bank of India to reduce interest rates in view of the slump in production,” RK Gupta, managing director of Taurus Asset Management Ltd, which has $672mn in assets, said by phone from New Delhi yesterday. The rupee rose to a three-week high after a German court allowed ratification of a bailout fund and on speculation the Federal Reserve will announce more bond purchases to spur economic growth. The currency advanced 0.2% to 55.2300 per dollar in Mumbai, according to data compiled by Bloomberg. It touched 55.1475 earlier, the highest level since August 23. The rupee has gained 0.4% over the past two days as the Dollar Index, which tracks the greenback against six major trading partners, dropped 0.9%. The currency strengthened for a second day as exchange data showed foreign funds added $232mn to their Indian share holdings. It briefly pared gains after a government report showed factory output grew 0.1% in July from a year earlier, falling short of the median forecast of economists in a Bloomberg survey for a 0.5% gain. From gulf times.