Indian shares rise 1.4 pct, Reliance Comm drops

(Updates to close)

By Narayanan Somasundaram

MUMBAI, June 16 (Reuters) - Indian shares climbed 1.4
percent on Monday to their highest in more than a week as
investors picked up beaten down stocks such as financials, but
the outlook was wary as oil nudged closer to $135 a barrel.

No. 2 mobile operator Reliance Communications (RLCM.BO: Quote, Profile, Research) was
among the big losers in the top-30 BSE index, amid fears a
family feud could delay a multi-billion dollar tie-up with
South Africa's MTN (MTNJ.J: Quote, Profile, Research). See [ID:nBOM196763]

The stock ended 1.5 percent down at 535.10 rupees after
starting up 0.5 percent.

Energy group Reliance Industries (RELI.BO: Quote, Profile, Research), run by Mukesh
Ambani, said last week it had the right of first refusal to a
controlling stake in Reliance Communications, owned by younger
brother Anil Ambani.

"The market hates uncertainity and any such news would not
help the stock," Jayesh Shroff, fund manager at SBI Mutual
Fund, said.

Reliance Communications has been in exclusive talks with
MTN since late-May about a deal that could create a top-10
global telecoms firm. As part of a tie-up, Anil Ambani would
likely swap his control of Reliance Communications to become
the largest shareholder in MTN.

"I see the stock subdued in the short-term at least," said
Harit Shah, telecoms analyst at Angel Broking. "Sentimentally,
it is negative unless a clear settlement is arrived at."

Bigger rival Bharti Airtel (BRTI.BO: Quote, Profile, Research) rose 3.2 percent to
839.60 rupees, its highest close since June 3, after falling
7.1 percent in the past two weeks.

The 30-share BSE index .BSESN closed up 1.36 percent, or
206.20 points, at 15,395.82, with 23 components rising.

The benchmark had risen as much as 2.4 percent during
trade, but came off towards the close.

"There is a lack of conviction at higher levels. And crude
moved up again adding to the concern," said Amitabh
Chakraborty, president for equities at Religare Securities.

Crude rebounded to $134.90 a barrel after falling in
response to plans by Saudi Arabia to push output to its highest
rate in decade. See [ID:nSYD220885]

India imports almost 70 percent of its oil requirements and
an about 10 percent increase in state-set fuel prices on June 4
is expected to propel inflation to double-digits, the highest
in more than 13 years.

Beaten down financial stocks rose, with No. 2 lender ICICI
Bank (ICBK.BO: Quote, Profile, Research) rising 4.4 percent to 798.70 rupee, its highest
close in more than two weeks, while smaller rival HDFC Bank
(HDBK.BO: Quote, Profile, Research) rose 2.5 percent to 1,151.45 rupees.

The BSE Bank index rose 2.8 percent but is down
nearly 36.5 percent in 2008.

Export-driven software stocks were bolstered by a
strengthening dollar. Bellwether Infosys Technologies
(INFY.BO: Quote, Profile, Research), which gets more than half its revenue from the
United States, rose 2.3 percent to 1,907.25 rupees and Satyam
Computer Services (SATY.BO: Quote, Profile, Research) gained 1.6 percent to 488.45
rupees.

Top listed firm Reliance Industries (RELI.BO: Quote, Profile, Research), which has
the heaviest weight in the main index, ended 0.7 percent higher
at 2,284.85 after sliding 5.5 percent in the past two weeks.

Copper maker Sterlite Industries Ltd (STRL.BO: Quote, Profile, Research) rose 3.25
percent to 795.45 rupees and Tata Power (TTPW.BO: Quote, Profile, Research) rose 3.8
percent to 1,300.25 after being included in the benchmark
index.

In the broader market, 1,774 gainers led 873 losers.

The BSE index, or Sensex, had fallen 2.5 percent last week
and is down 24 percent so far in 2008.

"The indices look severely oversold with positive
divergence on most technical indicators. A pullback to the
entire fall can be expected during which the Sensex could
potentially test 16,000," JM Financial said in a note before
trading began.

The 50-share NSE index .NSEI ended 1.2 percent higher at
4,572.50 points.

Elsewhere in the region the Karachi's 100 share index
.KSE fell 3.8 percent to 12,444.13 points and Colombo's All
share index .CSE dropped 0.4 percent to 2,444.91.

STOCKS THAT MOVED

* GAIL India Ltd (GAIL.BO: Quote, Profile, Research) rose 4.5 percent to 398.05
rupees after the state-run gas transporter said its board would
meet on June 23 to consider a bonus share issue.

* Real estate firm Unitech Ltd (UNTE.BO: Quote, Profile, Research) firmed 5.6 percent
to 197.80 rupees after it said a unit of Lehman Brothers
LEH.N would invest $175 million for a 50 percent stake in a
Mumbai project.

* Compressor maker Atlas Copco India Ltd (ATLA.BO: Quote, Profile, Research), a unit
of Sweden's Atlas Copco (ATCOa.ST: Quote, Profile, Research), rose by its daily limit of
20 percent to 1,077.90 rupees after it said its board would
meet on June 25 to consider a buyback of shares.

MAIN TOP 3 BY VOLUME

* Chambal Fertilisers & Chemicals Ltd (CHMB.BO: Quote, Profile, Research) on 25.8
million shares.

* Nagarjuna Fertilizers & Chemicals Ltd (NGFR.BO: Quote, Profile, Research) on 18.9
million shares.

* Anus Laboratories (ANUL.BO: Quote, Profile, Research) on 11 million shares

FACTORS TO WATCH
* Indian rupee gains on firmer stock market
[INR/]
* Indian bond yields at day's low as oil softens
[IN/]
* FOREX- G8 weighs on dollar, risk appetite hurts yen
[FRX/]
* Oil above $134, Saudi Arabia to raise output
[O/R]
* GLOBAL MARKETS-Shares steady, Barclays boost banks in key
week [MKTS/GLOB]
* US STOCKS- U.S. stocks set to edge up; Lehman Q2 in focus
[.N]
* For closing rates of Indian ADRs
INADR
(Editing by Ranjit Gangadharan)