Indian shares rise 1.5 pct, Reliance Ind leads

(Updates to mid-morning)

MUMBAI, July 4 (Reuters) - Indian shares rose 1.5 percent
on Friday as domestic funds began picking bargains after the
market had tumbled 15 percent in the past two weeks, but high
oil prices and inflation were a concern.

Traders said sentiment was underpinned by expectations the
government would win over a regional party to help keep its
parliamentary majority if the coalition's left allies withdraw
their support.

"We have had no bad news today and there could be some
clarity on the political front," Dipak Acharya, fund manager
at BoB Asset Management Co, said.

Top listed firm Reliance Industries (RELI.BO: Quote, Profile, Research), which enjoys
the highest weightage in the main index, rose 1.5 percent to
2,101.80 rupees, after losing more than 6 percent in the past
two weeks.

No. 2 mobile operator Reliance Communications (RLCM.BO: Quote, Profile, Research)
climbed 3.3 percent to 402.50 rupees on expectation South
Africa's MTN (MTNJ.J: Quote, Profile, Research) may extend talks beyond the 45 days that
ends on July 8 to forge a tie-up between the two.

At 11:10 a.m. (0540 GMT), the bechmark 30-share index
was up 1.52 percent, or 199.25 points, at 13,293.76.
It rose more than 2 percent in early deals but was down 34.5
percent so far in 2008.

In the broader market, 1,157 gainers led 945 losers on
volume of 83 million shares.

"There are quite a few bargains waiting to be picked up and
we were ripe for a technical pullback too," Acharya said.

Leading construction and engineering firm Larsen & Toubro
(LART.BO: Quote, Profile, Research) rose 2.8 percent to 2,296 rupees, after falling 12.6
percent in the past two weeks.

India's left parties could decide on Friday when to
withdraw support to the government in protest against a U.S.
civilian nuclear deal, but the coalition appeared closer to
winning support from a regional party. [ID:nISL29713]

Traders said inflation and high oil prices were a concern.

Annual inflation is expected at 11.63 percent in the week
ended June 21, newspapers and televisions channels said, higher
than market expectations for 11.44 percent. The data is due at
noon (0630 GMT).

Oil CLc1, India's biggest import, was trading above $145
a barrel after smashing records five times in the past seven
sessions on tensions between Israel and Iran. See [ID:nSIN6275]

Tata Steel (TISC.BO: Quote, Profile, Research), the world's sixth-largest steel
maker, was the only loser in the index dropping 1 percent to
650.60 rupees after producers pledged to drop prices of some
products by up to 10 percent under pressure from the
government.

The 50 share NSE index was up 0.97 percent at
3,963.80.

Elsewhere in the region, Karachi's 100 share index
fell 0.64 percent to 11,958.76 and Sri Lanka's Colombo All
share index .CSE eased 0.31 percent to 2,412.59.

STOCKS ON THE MOVE

* Archidply Industries (ARCY.BO: Quote, Profile, Research) was trading at 53.50
rupees on debut versus its issue price of 74 rupees.

* Construction and engineering firm Punj Lloyd (PUJL.BO: Quote, Profile, Research)
rose 5.75 percent to 211.60 rupees after it said on Thursday it
had won a 10.05-billion-rupee order from GVK Power.

* Diversified Jain Irrigation (JAIR.BO: Quote, Profile, Research) rose 3.5 percent to
452 rupees after 3.53 percent of the company changed hands in a
block deal at 442 rupees on the BSE.

FACTORS TO WATCH
* For technical analysis double click on www.reutersindia.net
* Indian rupee gains but oil a concern, data awaited
[INR/]
* Indian bond yields at 7-year high before inflation
[IN/]
* FOREX-Dollar holds gain on U.S. payrolls, Trichet
[FRX/]
* Oil pauses near record over $145, U.S. holiday ahead
[O/R]
* GLOBAL MARKETS-Asia stocks slip as oil hovers near record
[MKTS/GLOB]
* Wall St Week Ahead: For stocks, escaping bear hinges on oil,
GE [.N]
* For closing rates of Indian ADRs
INADR
(Reporting by Narayanan Somasundaram; Editing by Ranjit
Gangadharan) ((narayanan.somasundaram@thomsonreuters.com; 91
22 6636 9068; Reuters Messaging
narayanan.somasundaram.reuters.com@reuters.net))

ASIA-PACIFIC STOCK MARKETS:
Pan-Asia........[STXNEWS/AS] Japan.......[.T]
S.Korea...[.KS]
S.E. Asia.......[.SO] Hong Kong...[.HK]
Taiwan....[.TW]
Australia/NZ....[.AX] India.......[.BO] China.....[.SS]

OTHER MARKETS:
Wall Street ....[.N] Gold .......[GOL/]
Currency..[FRX/]
Eurostocks.....[.EU] Oil ........[O/R] JP
bonds...[JP/]
ADR Report .....[ADR/] LME metals.[MET/L] US bonds..
[US/]
Stocks News US..[STXNEWS/US] Stocks News Europe [STXNEWS/EU]

DIARIES & DATA:
Indian Data Watch [ID:nINDATA] Asia earnings diary
[ASIA/EQTY]
U.S. earnings diary [RESF/US] European diary
[WEU/EQTY]
Indian diary [IN/DIARY] Wall Street Week Ahead
[.N/O]
Eurostocks Week Ahead [.EU/O] Upcoming IPOs
<IN/IPOMENU>

TOP NEWS:
For top Asian company news, double click on:
[nTOPEQA]
U.S. company news [TOP/EQU] European company news
[TOP/EQE]
Forex news [TOP/FRX] Global Economy news
[TOP/MACRO]
Technology news [TOP/TECH] Telecoms news
[TOP/TELCO]
Media news [TOP/MEDIA] Banking news
[TOP/FIN]
Politics/General news [TOP/G] Asia Macro data
ECONASIA
A multimedia version of Reuters Top News is available at:
topnews.session.rservices.com

LIVE PRICES & DATA:
World Stocks <0#.INDEX> Currency rates <EFX=>
<NFX=>
Dow Jones/NASDAQ .DJI .IXIC Nikkei
.N225
FTSE 100 .FTSE Debt <0#USBMK=>
EURIBOR
Indian rupee <INR=IN> LME price overview <RING=>