Indian shares gain; auto, pharma shares rally

* BSE ends up 0.4 pct; NSE gains 0.39 pct
* Robust earnings boost Indian drug makers' shares
* SBI recovers from Tuesday fall

By Manoj Dharra
MUMBAI, Oct 31 (Reuters) - Indian shares rose on Wednesday,
recovering from steep falls in the previous session, as auto
makers such as Maruti Suzuki India Ltd rose on hopes
sales would rebound, while drug makers including Glenmark
Pharmaceuticals extended a recent rally on the back of
robust earnings.
State Bank of India pulled back from the previous
session's drop as hopes of sturdier-than-expected quarterly
earnings offset concerns after the central bank on Tuesday
raised the provisioning level for restructured assets.
Indian shares posted their biggest monthly fall since May,
reversing the gains seen last month after the impact from the
government's slew of fiscal and economic reforms waned.
Investors had hoped the Reserve Bank of India would help
stem losses by cutting interest rates on Tuesday, but the
central bank opted instead to tackle liquidity via a cut in the
cash reserve ratio, sending shares lower.
"After RBI policy, there are no further triggers but only
hopes of some more reforms," said Vijay Kedia, director at
private wealth management firm Kedia Securities.
"Upside seems capped and market would remain choppy for the
near term," he said.
India's BSE index rose 0.4 percent or 74.53 points
to end at 18,505.38 points, falling 1.37 percent for the month,
pulling back after surging 7.65 percent in September.
The 50-share NSE index rose 0.39 percent or 21.80
points to 5,619.70, also falling 1.47 percent for the month.
State Bank of India gained 1.7 percent, rebounding from the
previous session's 4.3 percent fall.
SBI Chairman Pratip Chaudhuri said on Tuesday asset quality
in July-September was looking better than in the first quarter
of the fiscal year, raising hopes for quarterly earnings due
next week.
Maruti Suzuki rose 3.4 percent after India's biggest
carmaker said on Tuesday it expects sales to accelerate in the
months ahead helped by new launches after posting a
fifth-straight quarterly profit decline.
Tata Motors shares gained 2.9 percent after
Goldman Sachs said the auto maker's market cap has potential to
reach $30 billion by fiscal 2017, from its current value of
$13.8 billion, should unit Jaguar Land Rover take action such as
launching smaller engine and lower priced
vehicles.
Shares of Indian drug firms extended gains after reporting
strong quarterly earnings.
Glenmark shares rose 8.6 percent on Tuesday after its net
profit almost tripled in the July-September quarter.

India's no. 2 drug maker Dr Reddy's Laboratories
gained 1.9 percent, up for a third day, after posting a
better-than-expected 32 percent rise in quarterly net profit.

Biocon shares gained 2.4 percent after posting a
4.7 percent rise in quarterly net profit.
However, among decliners, Larsen & Toubro fell 0.7
percent, down for a third session on continued profit-booking
after a rally last week helped by market-beating July-September
earnings.
Bharat Heavy Electricals lost 1.75 percent,
continuing to reel after reporting a drop in quarterly earnings
on Monday.
Oil and Natural Gas Corp fell 1.65 percent after
Credit Suisse downgraded the stock to 'underperform' from
'neutral', citing rising risks to earnings in fiscal 2012/13,
sparking worries about the company's outlook.
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FACTORS TO WATCH
* Euro firms, boosted by equity gains, German data
* Brent hovers near $109; recovery eyed after Sandy
* Shares, euro gain as markets wait for Wall St cues
* Foreign institutional investor flows
* For closing rates of Indian ADRs

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(Additional Reporting by Abhishek Vishnoi; Editing by G.Ram
Mohan)