Indian shares rise 0.5 pct; banks, Rel Comm lead

(Updates to close)

By Hiral Vora

MUMBAI, May 16 (Reuters) - Indian shares rose 0.47 percent
on Friday to their highest close in nearly two weeks, led by
banks and second-ranked mobile firm Reliance Communications
(RLCM.BO: Quote, Profile, Research) and showing little discomfort at inflation nearing 8
percent.

Reliance Communications rose 2.2 percent to a three-month
closing high of 601.85 rupees, taking its gains to over 10
percent in three days. Sources said it had approval for an
initial public offer of 10 percent in its telecoms tower unit.
[ID:nDEL236874]

Top engineering and construction firm Larsen & Toubro
(LART.BO: Quote, Profile, Research) rose 1.1 percent to 2,996.35 rupees, its highest
close since May 7. It has risen 5.9 percent since the sale of
its ready-mix cement business to France's Lafarge (LAFP.PA: Quote, Profile, Research) was
announced on Wednesday evening.

The 30-share BSE index rose 81.40 points to
17,434.94, its highest close since May 5. The index rose 4.2
percent on the week, but is still down 14.1 percent this year.

The market is closed on Monday for a local holiday.

In the broader market, 1,547 gainers led 1,138 losers on
volume of 341 million shares.

"This is a purely trading market and not for investment,
and thanks to lack of immediate triggers it does not even have
a direction right now," said Daljeet Kohli, head of research at
Emkay Shares and Stock Brokers Ltd.
"Most of the negative news on the economy front has been
factored in, so inflation does not surprise anybody any more,"
he said, adding he saw the market trading sideways for the next
week with some stock-specific action.

India's annual inflation rate hit a 3-½ year high of 7.83
percent on May 3, data showed. [ID:nDEL225302].

Improved global sentiment towards bank stocks helped top
private bank ICICI Bank (ICBK.BO: Quote, Profile, Research) gain 1.3 percent to 941.15
rupees, and HDFC Bank (HDBK.BO: Quote, Profile, Research) rose 1.8 percent to 1,502.30
rupees.

Sector leader State Bank of India (SBI.BO: Quote, Profile, Research) rose 1.4 percent
to 1,704 rupees. The sector index rose 1.5 percent.

The 50-share NSE index closed 0.83 percent higher
at 5,157.70 points, its highest close since May 5.

Elsewhere in the region, Karachi's 100-share index
fell 1.71 percent to 14,232.89 points, while Colombo's
All-Share index .CSE fell 0.51 percent to 2,595.64 points,
its lowest close since March 31.

STOCKS THAT MOVED

* State-run Punjab National Bank (PNBK.BO: Quote, Profile, Research) rose 6.1 percent
to 569.75 rupees after its chairman said the bank was aiming at
22 percent growth in net profit during 2008/09. [ID:nDEL66729].

* Bongaigaon Refinery & Petrochemicals Ltd BNGR.BO rose
8.9 percent to 61.65 rupees after its March quarter net profit
rose 68 percent.

MAIN TOP 3 BY VOLUME

* Aishwarya Telecom Ltd AISH.BO on 29.3 million shares.

* IFCI Ltd (IFCI.BO: Quote, Profile, Research) on 14.3 million shares.

* Ispat Industries Ltd (ISPT.BO: Quote, Profile, Research) on 11.6 million shares.

FACTORS TO WATCH
* For technical analysis double-click on www.reutersindia.net
* Indian rupee falls to near 43/dlr after inflation
[INR/]
* Indian bond yields ease from 1-wk high before data
[IN/]
* FOREX-Data contrast knocks dollar vs euro, yen
[FRX/]
* Oil rebounds above $125 as dollar weakens
[O/R]
* GLOBAL MARKETS-Asian stocks rise as dollar holds its ground
[MARKETS/AS]
* US STOCKS- Oil's fall, tech's gain drive stocks higher
[.N]
* For closing rates of Indian ADRs
INADR (Editing by John Mair)