Dec 22 (Reuters) - Indian shares rose on Monday in broad-based buying, led by financials and information technology stocks, as foreign investors showed signs of returning to domestic equities after a rebound in the rupee, lifting overall sentiment.

The Nifty 50 rose 0.61% to 26,128.4 and the BSE Sensex added 0.56% to 85,408.76 as of 10:13 a.m. IST.

All the 16 major sectors traded higher. The broader mid-caps and small-caps gained 0.5% and 0.4%, respectively.

The 50-stock Nifty index had fallen for three consecutive weeks amid concerns over foreign fund outflows and the rupee's depreciation, while a delay in a potential India-U.S. trade deal also weighed.

However, foreign portfolio investors bought Indian shares worth 18.31 billion rupees ($204.42 million) on a net basis on Friday, according to provisional data, taking their purchase to 37.76 billion rupees in the last three sessions.

"It appears that the market is heading for a year-end rally... (A reversal in rupee and FPI inflows) can trigger short covering in the market," said VK Vijayakumar, chief investment strategist at Geojit Investments.

The Nifty 50 index needs to surpass 26,050-26,200 zone, which can establish further stability and conviction for further upside in the coming days, said Vaishali Parekh, vice president - technical research at PL Capital.

Meanwhile, minutes of the Reserve Bank of India's December policy meeting showed that a potential moderation in economic growth next year, along with subdued inflation, could open space for more interest rate cuts.

Infosys added 2.3%, and led the gains among IT stocks, after a sharp surge in its American-traded shares, post Indian market hours on Friday.

The IT major clarified there were no material events that required disclosure.

GE Vernova T&D India jumped 8% after receiving a multi-year contract from AESL Projects for establishing a high-voltage direct current (HVDC) voltage source converter.

(Reporting by Vivek Kumar M; Editing by Subhranshu Sahu, Ronojoy Mazumdar and Janane Venkatraman)

By Vivek Kumar M