Indian shares edge higher; more volatility seen ahead

* BSE gains 0.18 pct; NSE gains 0.22 pct
* Cement makers fall on earnings, royalty report
* Stocks seen volatile ahead of earnings, RBI

By Manoj Dharra
MUMBAI, Oct 17 (Reuters) - Indian shares edged higher on
Wednesday as recently-hit stocks such as Infosys recovered,
while Cairn India and HDFC rose on market talk index provider
MSCI will increase the weighting of the two by its November
review.
However sentiment remained largely cautious with the recent
period of volatility expected to continue as more companies line
up to report their earnings, including ACC and Ambuja
Cements on Thursday.
Corporate earnings and the Reserve Bank of India's policy
review on Oct. 30 are seen as the next big triggers for markets,
given continued concerns about the outlook for economic growth
and the continued threat of sovereign rating downgrades.
"Given the recent rally and most participants expecting GDP
growth of 5.5 to 6 percent, what market needs is earnings
support," said Aneesh Srivastava, chief investment officer at
IDBI Federal Life Insurance.
"But the way the political environment and interest rates
are today, it will be difficult for markets to substantially
move ahead," he added.
India's BSE index rose 0.18 percent, or 33.07
points, to 18,610.77 points.
The 50-share NSE index rose 0.22 percent, or 12.25
points, to 5,660.25 points.
Recently battered shares recovered on Wednesday. Infosys Ltd
rose 0.6 percent after shares had fallen 7 percent in
the previous three sessions after the technology services
provider disappointed investors with its earnings outlook.
Larsen & Toubro gained 1.3 percent after falling
2.9 percent in the previous three sessions.
Also gaining on Wednesday, Housing Development Finance Corp
rose 1.2 percent while Cairn India gained
1.8 percent.
A source at MSCI told Reuters the weighting of both stocks
are expected to change by later this year, attributing the
reasons to recent block deals and private placements by the two
companies.
Carlyle Group raised $841 million by selling its
remaining 3.7 percent stake in HDFC, while Cairn Energy
raised about $922 million by selling an 8 percent stake in Cairn
India.
Drug maker Lupin rose 2.92 percent after receiving
U.S. Food and Drug Administration approval for generic Avapro
tablets for treating hypertension.
However, cement makers ACC fell 1.25 percent, while Ambuja
Cements dropped 3 percent after TV news channel ET Now reported
the companies may provide a 2 percent royalty on sales to
parent company Holcim, citing unnamed sources.
ACC declined to comment on the report, while Ambuja did not
respond to questions from Reuters. The two companies are set to
post earnings results on Thursday.
Reliance Industries fell 0.9 percent on
expectations the energy conglomerate will not be able to sustain
a rebound in refining margins in the July-September quarter, and
on concerns about valuations after a recent rally.
HCL Technologies fell 0.7 percent, retreating from
a 12-year high hit earlier in the session after posting a 78
percent jump in quarterly profit.
JSW Steel fell 2.8 percent after India's federal
police agency named senior company officials among the accused
in a case related to illegal iron ore mining in the southern
state of Karnataka.
JSW called the charges "without basis."

FACTORS TO WATCH
* Euro hits 1-month high, uncertainty may check gain
* Brent oil slips as global economy worry persists
* Euro gains as Spain dodges rating downgrade
* Foreign institutional investor flows
* For closing rates of Indian ADRs

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(Additional reporting by Abhishek Vishnoi; Editing by Rafael
Nam)