India shares rise over 1 pct; SBI up on rights issue

BANGALORE (Reuters) - Indian shares rose more than 1 percent on Friday, led by gains in Reliance Industries, but traders said any move higher needed strong foreign inflows if it was to be sustained.

State-run State Bank of India gained 2.3 percent to 2,322 rupees after the Indian cabinet approved a rights issue worth 100 billion rupees ($2.5 billion).

The market was underpinned by a rally in Asian stocks after comments by U.S. Federal Reserve Chairman Ben Bernanke reinforced expectations of further cuts in U.S. interest rates.

Data showing India's economy in the July-September quarter grew a marginally faster-than-expected 8.9 percent from a year earlier also boosted sentiment, traders said.

At 11:30 a.m., the benchmark BSE 30-share index was up 1.17 percent, or 221.51 points, at 19,224.77, with 27 components gaining ground.

"The recent trend of the market losing momentum at higher levels may continue, because there is no fresh money coming into the market," said D.D. Sharma, vice-president at Mumbai-based Anand Rathi Securities.

The main index, or Sensex, has risen 39.4 percent so far this year, but is 5 percent below Oct. 30's record high of 20,238.16.

Foreigners have been net sellers of almost $1.3 billion of shares this month, a turnaround from buying of more than $7 billion between mid-September and end-October that drove the market to a series of record highs.

"If fresh money doesn't come into the market, no matter how good the rally is, it will be very difficult to sustain any move on the higher side," said Arun Kejriwal, strategist at research firm KRIS.

Religare Securities said a sustained break above resistance at 19,360 would be bullish and could trigger a move to 19,883-20,104.

"The Sensex intermediate trend and larger degree trends are positive, (but) as the short-term trend remains indecisive, adopt wait-and-watch policy until it decisively moves above 19,360," it said in the report.

Reliance Industries rose 0.9 percent to 2,844.10 rupees after a top official at India's largest listed firm said it plans to spend 170 billion rupees on exploration in the next few years.

Largest listed real estate firm DLF Ltd was up 5.5 percent at 930 rupees, its highest level in more than a week.

Shares of property firms have been in focus after

Maharashtra, India's richest state, on Thursday scrapped a law that controlled urban land holdings, potentially freeing up large tracts of prime real estate in the financial hub of Mumbai.

Tata Steel put on 2.1 percent to 818.90 rupees after its managing director told Reuters the company would seek more joint ventures with Australian mining firms as it can not supply enough of its own raw materials as its steel making capabilities soar.

In the broader market, 1,619 gainers were ahead of 856 losers on volume of 159 million shares.

The 50-share NSE index was up 1.69 percent at 5,730.

Elsewhere in the region, Karachi's 100-share index was up 0.59 percent at 14,047.39 and Colombo's All-share index edged up 0.16 percent at 2,562.19.

STOCKS ON THE MOVE

* Abrasives maker Carborundum Universal Ltd rose 7.3 percent to 171.90 rupees after the company said it sold land and a manufacturing facility near Chennai for 580 million rupees.

* Parle Software Ltd was up nearly 9 percent at

1,799 rupees, having hitting an all-time high of 1,817 rupees in early trade, after its board recommended a three-for-one bonus share issue.

MAIN TOP THREE BY VOLUME

* Ispat Industries Ltd on 21 million shares

* Reliance Petroleum Ltd on 15.2 million shares

* Reliance Natural Resources Ltd on 7.4 million shares