Indian shares pare rise to 0.5 pct; Infosys drops

* Investor fatigue sets in after two-week rally

* Financials up on improving global sentiment toward sector

* Political risks, econ worries are formidable challenges
(Updates to close)

By Pratish Narayanan

MUMBAI, March 24 (Reuters) - Profit-taking pared gains in
Indian shares to 0.5 percent on Tuesday after the market rose
nearly 3 percent early, adding to a rise of more than 13
percent over the past two weeks.

Financials such as ICICI Bank (ICBK.BO), HDFC Bank
(HDBK.BO) and State Bank of India (SBI.BO) were among the top
gainers, while Oil & Natural Gas Corp (ONGC.BO), Reliance
Communications (RLCM.BO) and Infosys Technologies (INFY.BO)
fell.

Traders said there were signs of investor fatigue, with a
slowing Indian economy and uncertainty about the outcome of
upcoming general elections remaining formidable challenges.

"This is not a runaway market," Jayesh Shroff, fund manager
at SBI Mutual Funds, said. "Nothing has changed dramatically in
the past few days. There is a lot of uncertainty."

The 30-share BSE index .BSESN ended up 47.02 points at
9,471.04 points, after rising to almost 9,700 during trade.
Advancers and losers were evenly matched.

It was the best close in more than five weeks. On Monday,
the benchmark had climbed 5.1 percent in its biggest one-day
rise since early December.

The rise was underpinned by the U.S. plan to clean up bank
balance sheets, which revived global appetite for risk.

But local factors made investors wary.

India goes to the polls in April and May, and early
forecasts indicate a fractured mandate with neither of the
country's two main political parties unlikely to get a majority
in parliament.

This comes as economic growth is forecast to fall below 6
percent to a seven-year low in 2009/10 after the global crisis
hits Asia's third-largest economy harder than expected.

India's ruling Congress party said in its election
manifesto on Tuesday it would include a hugely subsidised food
scheme in new measures to protect farmers and the poor from the
impact of the global slowdown. Some economists see the move
increasing the country's spiralling fiscal deficit.
[ID:nISL433963]

ICICI rose 2.4 percent to 355.10 rupees, while HDFC Bank
climbed 6.3 percent to 940.50 rupees. Government-run State Bank
of India gained 1.1 percent to 1,034.65 rupees.

Reliance Industries (RELI.BO), which has the biggest weight
in the main index, rose 0.8 percent to 1,451.65 rupees as the
energy giant gets set to pump gas from its Krishna Godavari
basin field off India's east coast.

ONGC fell 2 percent to 779.45 rupees, while telecoms firm
Reliance Communication shed 4 percent to 161.45 rupees and No.
2 software-services exporter Infosys slipped 0.6 percent to
1,322.95 rupees.

In the broader section, losers led advancers 1,399 to 1,142
on moderate volume of 343.1 million shares.

The 50-share NSE index .NSEI slipped 0.04 percent to
2,938.70.

Asian shares rose to their best level in two months as the
U.S. plan lifted investor confidence across the region. Japan's
Nikkei .N225 gained 3.3 percent, while MSCI's measure of
other Asian markets .MSCIAPJ was up 1.8 percent.

MAIN TOP 3 BY VOLUME

* Unitech (UNTE.BO) on 21.2 million shares

* Suzlon Energy (SUZL.BO) on 15.7 million shares

* Reliance Natural Resources (RENR.BO) on 15.2 million
shares

STOCKS THAT MOVED

* Kalpataru Power Transmission Ltd (KAPT.BO) rose 6.6
percent to 313.25 rupees after it secured three orders worth
3.99 billion rupees from Power Grid Corp (PGRD.BO) for
transmission line projects.

* Omaxe Ltd (OMAX.BO) firmed 7.2 percent to 46.10 rupees
after it said late on Monday it won a contract worth 399.5
million rupees to build a convention centre, library and
computer centre in Mumbai. The real estate firm also launched a
new project worth 2.5 billion rupees.

FACTORS TO WATCH
* For technical analysis double click on www.reutersindia.net
* India rupee drops as euro weakens, stks pare gains
[INR/]
* Indian bond yields off lows as auctions loom
[IN/]
* Yen falls on US bank plan, dollar index edges up
[FRX/]
* Oil retreats towards $53 after 3 pct surge [O/R]
* World stocks hit 5-wk high on US toxic asset plan
[MKTS/GLOB] * U.S. stock futures point to dip after strong
rally [.N] * For closing rates of Indian ADRs

INADR (Editing by Ranjit Gangadharan)