Indian shares rise 2 pct as techs, banks climb

(Updates to late morning)

NEW DELHI, July 7 (Reuters) - Indian shares rose more than
2 percent on Monday, led by software services firms and beaten
down banks, as political stability concerns eased but high oil
prices and inflation remained a risk to the recovery.

Export-focused software firms gained 2-3 percent ahead of
bellwether Infosys Technologies' (INFY.BO: Quote, Profile, Research) quarterly earnings
on Friday. A weaker rupee is widely expected to have boosted
revenue for the sector in the June quarter.

The Congress party-led coalition won assurance of support
from a regional party on Saturday for a U.S. nuclear deal,
which should help the government secure a parliamentary
majority if its left allies withdrew their support.
[ID:nDEL96106]

S.P. Tulsian, an independent investment consultant, said
expectation for political stability was driving the markets,
even as high crude prices and accelerating inflation remained.

At 11:43 a.m. (0613 GMT), the 30-share BSE index
was up 2.33 percent, or 314.03 points, at 13,768.03, with 28 of
the components gaining.

The benchmark had risen 2.8 percent on Friday, but ended
the week down 2.5 percent in its longest stretch of weekly
losses in seven years. It is down nearly a third this year.

"I expect the market to go up at least 1,000 to 1,500
points from here," Tulsian said.

Oil CLc1 was trading around $144 a barrel, holding near
last week's record high after Iran reasserted its right to
pursue uranium enrichment. See: [O/R]

Brokerage India Infoline said in a note it was too early to
say the "bearish phase is over".

"Crude oil remains the biggest joker in the pack," it said.

Tulsian said if oil crossed $150 it would undermine the
stock market, but current levels were factored into prices.

"Same goes for inflation. If it remains within 12 percent,
that is already been discounted by the market," he said.

Annual inflation hit 11.6 percent, the highest in more than
13 years, in mid-June.

Shares in ICICI Bank (ICBK.BO: Quote, Profile, Research) gained 4.9 percent to 630
rupees, while engineering firm Larsen & Toubro (LART.BO: Quote, Profile, Research) added
3.5 percent to 2,463.70 rupees as investors bought bargains
after heavy falls in recent weeks.

The two stocks constitute more than 14 percent of the main
index.

Among software firms, Infosys was up 2 percent at 1,789.70
rupees, Wipro gained 2.3 percent to 439.05 rupees and while
Satyam firmed 2.9 percent to 475.40 rupees.

Mobile operator Reliance Communications (RLCM.BO: Quote, Profile, Research) was up
2.5 percent at 449.35 rupees after the Wall Street Journal
reported on Sunday it would continue tie-up talks with South
Africa's MTN Group Ltd (MTNJ.J: Quote, Profile, Research) beyond Tuesday's deadline.
[ID:nBOM80419]

Reliance Capital (RLCP.BO: Quote, Profile, Research) and Reliance Infrastructure
(RLIN.BO: Quote, Profile, Research), also controlled by billionaire Anil Ambani who runs
Reliance Communications, rose more than 7 percent each after
tumbling in recent weeks.

But top private firm Reliance Industries (RELI.BO: Quote, Profile, Research),
controlled by his feuding brother Mukesh Ambani, dropped 0.5
percent to 2,089.50 rupees.

In the broader market, 1,852 gainers were ahead of 431
losers. Volume was 397 million shares, helped by a block deal
of 282.9 million shares in Spice Communications (SPCM.BO: Quote, Profile, Research).

The 50-share NSE index was up 2.20 percent at
4,104.

Elsewhere in the region, Karachi's 100-share index
was down 0.63 percent at 11,886.17 and Colombo's All-share
index .CSE slipped 0.25 percent to 2,398.42.

STOCKS ON THE MOVE

* State-run Oil and Natural Gas Corp (ONGC.BO: Quote, Profile, Research) was up 3
percent at 902.80 rupees. The company has qualified to bid as
an operator for Angolan deepwater blocks, which are likely to
be offered after elections in the African nation.

* SpiceJet Ltd (SPJT.BO: Quote, Profile, Research) rose 14.8 percent to 28.70 rupees,
extending gains for the fourth straight session, on media
reports that founders of the low-cost carrier were close to a
stake sale deal with Vijay Mallya-owned rival Kingfisher
Airlines.

MAIN TOP THREE BY VOLUME

* Spice Communications (SPCM.BO: Quote, Profile, Research) on 284 million shares

* Reliance Natural Resources (RENR.BO: Quote, Profile, Research) on 6.5 million
shares

* Reliance Petroleum (RPET.BO: Quote, Profile, Research) on 4.9 million shares

FACTORS TO WATCH
* For technical analysis double click on www.reutersindia.net
* Indian rupee hits 1-week high as shares rise
[INR/]
* Indian bond yields ease but outlook cautious
[IN/]
* FOREX-Dollar rise before Bernanke, G8 in focus
[FRX/]
* Oil hovers near $144, Iran sends mixed signals
[O/R]
* GLOBAL MARKETS-Asia stocks stem slide, led by Chinese banks

[MKTS/GLOB]
* For closing rates of Indian ADRs
INADR
(Reporting by Devidutta Tripathy; Editing by Ranjit
Gangadharan)