MUMBAI (Reuters) – The Nifty rose after hitting nearly 1-1/2 month low on Tuesday as investors churned positions in defensive stocks such as Lupin Ltd(LUPN.NS) from pharmaceutical sector on worries the record setting rally has run ahead of fundamentals.

Foreign institutional investors’ interest in India was near a short-term peak, CLSA said after interacting with 80 investors in the United States. The investment bank added earnings will take some time to pick up, while market triggers such as land and tax bills will not come into play in the near term.

MSCI India is currently trading around 18x of one-year forward earnings – a premium of nearly 15 percent over its 10-year average. The index has seen meaningful valuation decline thrice between 18-20x P/E since 2005.

Caution also prevailed ahead of the expiry of monthly derivatives contracts on Thursday.

“While it looks like the momentum is weakening, I hope things would normalise from next week onwards with the start of new derivative series,” said G. Chokkalingam, founder of Equinomics, a Mumbai-based research and fund advisory firm.

The benchmark BSE Sensex was up 0.4 percent while the broader Nifty rose 0.41 percent after earlier hitting their lowest intraday level since Feb. 10.

Lupin gained 3.6 percent, while Sun Pharmaceutical Industries (SUN.NS) rose 1.8 percent and Cipla (CIPL.NS) advanced 1.2 percent.

Dr.Reddy’s Laboratories (REDY.NS) also rose 1.1 percent while Aurobindo Pharma (ARBN.NS) and Glenmark Pharmaceutical (GLEN.NS) rose 2.2 percent each.

Among other defensives, cigarette maker, ITC (ITC.NS) gained 0.4 percent.

(Reporting by Abhishek Vishnoi; Editing by Anand Basu)