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* NSE index up 0.45 pct, BSE index 0.46 pct higher
* Both indexes near record highs hit last week
* 10-yr bond yield falls to lowest in four weeks
* Data shows easing inflation, spurring the rally
MUMBAI, May 15 (Reuters) - Indian shares rose on Monday, while the benchmark 10-year bond hit its highest in four weeks, after consumer inflation in April eased to its lowest in at least five years, reviving a debate on whether the central bank should cut interest rates.
Meanwhile, the rupee rose to 64.0275 per dollar, its strongest since April 27, on expectations of additional foreign portfolio inflows into Indian markets.
The rally came after data late on Friday showed consumer prices rose by an annual 2.99 percent, compared with 3.89 percent in March, extending a debate about whether the Reserve Bank of India is being too hawkish on inflation.
Hopes for easing inflation got a further boost after the domestic weather office said on Sunday monsoon rains had reached the country’s Andaman and Nicobar islands ahead of the schedule.
The RBI had stunned markets in February by changing its policy stance to “neutral” from “accommodative” and issuing a statement at its last policy meeting in April that was widely seen as hawkish.
Most analysts still expect the RBI to hold rates steady this year, although the inflation data and prospects of higher-than-expected monsoon rains are fuelling calls for the central bank to cut rates. The next policy meeting is set for June 6.
“The sharp pullback in April CPI inflation raises doubts on the central bank’s cautious policy outlook,” Radhika Rao, an economist for DBS Bank in Singapore, said in an email to clients.
“Eyes are next on the June RBI review. An about-turn in policy is unlikely but policy guidance will be more neutral and balanced than April.”
The broader NSE index was up 0.45 percent at 9,443.50 as of 0615 GMT, while the benchmark BSE index was 0.46 percent higher at 30,320.91.
Both indexes were not far from record highs hit last week.
Meanwhile, the benchmark 10-year bond yield was down 8 basis points at 6.83 percent, after earlier falling to 6.82 percent, the lowest since April 17.
The yield for the new 10-year bond eased 12 basis points to 6.67 percent from the cut-off price set on Friday, when the debt was sold for the first time.
Among individual share movements, Jindal Stainless Ltd rose as much as 5.90 percent to its highest in over nine years after the company announced its March-quarter results on Friday.
Among the losers, Idea Cellular Ltd fell as much as 6.28 percent after the company posted a net loss for the quarter ended March. ($1 = 64.1125 Indian rupees) (Reporting by Arnab Paul and Rafael Nam; Editing by Subhranshu Sahu)