Banks lift Indian shares 2pct, Reliance Comm falls

(Updates to close)

By Hiral Vora

MUMBAI, June 17 (Reuters) - Indian shares rose nearly 2
percent on Tuesday, led by gains in banking and financial
stocks, but Reliance Communications (RLCM.BO) extended losses
on worries a family feud could delay a multi-billion dollar
deal.

Traders said media reports that banks had paid sharply
higher advance taxes, indicating strong earnings, lifted
sentiment for financials and propelled the sector index
.BSEBANK up 4.3 percent.

Leading lender State Bank of India (SBI.BO) rose 4.6
percent to 1,387.05 rupees, its highest close since early June,
while No. 2 lender ICICI Bank (ICBK.BO) firmed 2.7 percent to
820.25, its best close in three weeks.

Advance quarterly taxes paid by State Bank and ICICI were
32 and 38 percent more respectively from a year earlier, the
Economic Times newspaper said, without citing sources.

Top mortgage firm Housing Development Finance Corp
(HDFC.BO) rose 6 percent to 2,298.05 rupees.

"Today's rise can be partly attributed to the advance tax
numbers being heard in the market, which are quite encouraging,
especially for the banking sector," said R.K. Gupta, managing
director at Taurus Asset Management Co.

"This eases investor apprehensions regarding the banking
sector and their earnings."

India's chief statistician told Reuters headline inflation
rate was likely to hover at 8 to 9 percent for some time and
would hit double digits before declining in the last quarter of
calendar 2008. See: [ID:nBOM302010].

No. 2 mobile operator Reliance Communications fell for a
second day, losing 0.9 percent to 530.20 rupees, on concern a
family feud could delay a multi-billion dollar tie-up with
South Africa's MTN (MTNJ.J).

The benchmark 30-share index .BSESN rose 1.96 percent or
301.08 points to 15,696.90, to its highest close since June 5,
with 25 components rising.

However, the index is nearly 23 percent down so far in
2008.

In the broader market, 1,801 gainers led 883 losers on
volume of nearly 280 million shares.

Biggest listed firm Reliance Industries (RELI.BO) rose 1.9
percent to 2,329.20 rupees.

Top domestic airline Jet Airways (JET.BO) rose 1.4 percent
to 541.50 rupees rupees after the Mint newspaper said Reliance
Industries was in talks to buy a 6-7 percent stake in the
carrier.

The 50-share NSE index rose percent to 4,653
points.

Elsewhere in the region, the Karachi's 100-share index
ended 0.43 percent higher at 12,497.86 points, but
Colombo's All share index .CSE eased 0.19 percent to
2,440.37.

STOCKS THAT MOVED

* Torrent Pharmaceuticals (TORP.BO) jumped nearly 20
percent to 185 rupees after large block deals were reported by
the exchange.

* South Indian Bank (SIBK.BO) ended up 3.1 percent at
127.15 rupees after it said it would consider a bonus share
issue on June 28.

MAIN TOP 3 BY VOLUME

* Chambal Fertilisers & Chemicals (CHMB.BO) on 12.3 million
shares

* Anu's Laboratories Ltd (ANUL.BO) on 11 million shares

* Reliance Natural Resources Ltd (RENR.BO) on nearly 10
million.

FACTORS TO WATCH
* Indian rupee edges up on firm stocks, weaker dlr
[INR/]
* Indian bond yields slip on soft oil
[IN/]
* FOREX-Dollar pressured, Fed rate hike bets questioned

[FRX/]
* Oil falls over a dollar
[O/R]
* GLOBAL MARKETS-Dollar, yields fall on revised US rate view

[MKTS/GLOB]
* Wall St futures up, data and Goldman in focus
[.N]
* For closing rates of Indian ADRs
INADR
(Editing by Ranjit Gangadharan)