Reliance lifts India shares; telcos, techs fall

* Reliance Ind gains 1 pct on surprise 1:1 bonus plan

* Bharti, Reliance Comm slide on profitability concerns

* Outsourcers Infosys, TCS extend losses on stronger rupee
(Updates to close)

By Ami Shah

MUMBAI, Oct 8 (Reuters) - Indian shares rose 0.2 percent on
Thursday, helped by Reliance Industries (RELI.BO) after its
bonus issue plan, but telecoms Bharti Airtel (BRTI.BO) and
Reliance Communications (RLCM.BO) fell on profitability
concerns.

Telecoms shares have slumped about a fifth this week on
worries falling tariffs and increased competition will squeeze
profit margins of the sector. [ID:nDEL55860]

Macquarie Securities downgraded the sector outlook on
Wednesday to underweight, and recommended investors to avoid
Indian telecoms.

Shares in leading outsourcers Tata Consultancy Services
(TCS.BO) and Infosys Technologies (INFY.BO), which get more
than half their revenue from North America, extended losses as
the rupee climbed to its highest in more than year.

Analysts said investors were wary ahead of Infosys'
quarterly results on Friday, when the software bellwether would
also give its forecast for the full year.

Annual inflation unexpectedly dipped in late September
despite firm food prices, giving a respite to bonds and
complicating the timeline for the central bank's planned exit
from its easy money stance. [ID:nDEL447462]

The widely watched wholesale price index INWPI=ECI rose
by 0.7 percent in the 12 months to Sept 26, below both market
forecasts and the previous week's 0.83 percent annual rise.

The 30-share BSE index .BSESN closed up 0.22 percent, or
36.88 points, at 16,843.54. It swung widely, rising 1.1 percent
early and then falling as much as 0.2 percent. Twenty-two of
its stocks gained.

Reliance, which has the heaviest weight on the main index,
ended up nearly 1 percent at 2,119.20 rupees after rising as
much as 5.2 percent during trade following a surprise
one-for-one bonus announcement after market hours on Wednesday.

Traders said concerns about falling refining margins and a
pending legal dispute trimmed the rise. [ID:nDEL28026]

Goldman Sachs said it maintained a 'buy' on the stock with
a 12-month target price of 2,620 rupees.

"Investors are sceptical about the outcome of the court
case and some have also expressed concerns about the company's
refining margins," Deven Choksey, managing director and CEO of
K. R. Choksey Shares, said.

Bharti, which called off talks for a proposed-tie up with
South Africa's MTN (MTNJ.J) last month, fell for the fourth
straight session taking its losses this week to over 23
percent.

It closed 6.6 percent lower at 334.65 rupees after hitting
331.25, which was its lowest in nearly six months.

Reliance Communications shed 6 percent to 246.30 rupees.

"We maintain our cautious view on the sector and expect war
cries as regards intensifying competition and lower tariffs to
get louder," ICICI Securities said in a note on Tuesday.

Tata Consultancy dropped 3.4 percent to 573.05 rupees and
Infosys shed 1.8 percent to 2,211.25 rupees.

Auto stocks rose on expectations for strong second-quarter
earnings. Top vehicles maker Tata Motors (TAMO.BO) raced 5.35
percent while Mahindra and Mahindra (MAHM.BO) and Hero Honda
HROH.BO rose 2.1 percent and 1.75 percent respectively.

Larsen & Toubro (LART.BO) closed 1.65 percent lower at
1,649.80 rupees, after the engineering and construction firm
said it raised $600 million through a sale of shares and
convertible debentures. [ID:nBOM161355]

The benchmark BSE index has risen about three-quarters this
year, helped by foreign portfolio inflows of $12.7 billion, and
analysts say the rally has made stocks pricey.

In the broader market, losers outpaced gainers in the ratio
of 1.2:1 on relatively heavy volume of 529 million shares.

The 50-share NSE index .NSEI closed up 0.3 percent at
5,002.25.

STOCKS THAT MOVED

* Dr Reddy's Laboratories (REDY.BO), India's second-largest
drug maker, rose nearly 3 percent to 976.35 rupees, after
sources said GlaxoSmithKline (GSK.L) has emerged as frontrunner
for a phased buy-in of the firm. [ID:nL7656731]

* Edserv Softsystems (EDSE.BO) climbed nearly 5 percent to
166.70 rupees as the e-learning firm won a 1-billion-rupee
training project from the Indian government.

MAIN TOP 3 BY VOLUME

* Unitech (UNTE.BO) on 15 million shares

* Ispat Industries ISPT.BO on 12.2 million shares

* Kingfisher Airlines (KING.BO) on 9.1 million shares

FACTORS TO WATCH
* For technical analysis double click on www.reutersindia.net
* India rupee report
[INR/]
* India bond report
[IN/]
* Dollar slides as Aussie surges; ECB, BoE up next
[FRX/]
* Oil rallies above $70 on recovery expectations
[O/R]
* Gold at fresh record, equities buoyant
[MKTS/GLOB]
* Wall St futures point to higher start for equities
[.N]
* For closing rates of Indian ADRs
INADR
(Editing by Ranjit Gangadharan)