Indian shares rise 0.8 pct; Infosys, ICICI gain

* Short-covering ahead of derivatives expiry helps

* Strong Asian markets support; HDFC, Larsen rise

* Monsoon delay is a worry, could slow growth

* ONGC falls after drop in quarterly profit
(Updates to mid-morning)

MUMBAI, June 25 (Reuters) - Indian shares rose 0.8 percent
on Thursday, led by outsourcer Infosys Technologies (INFY.BO)
and private-sector lender ICICI Bank (ICBK.BO), as investors
covered short positions on the last day of monthly derivatives
contracts.

"We are seeing some amount of short-covering and it is
being supported by the strong Asian markets," Ambareesh Baliga,
vice president at Karvy Stock Broking, said.

Top mortgage firm Housing Development Finance Corp
(HDFC.BO) and engineering and construction firm Larsen & Toubro
(LART.BO) were among the major gainers, but Oil and Natural Gas
Corp (ONGC.BO) fell a day after the state-run explorer reported
a surprise 16 percent drop in March-quarter profit.
[ID:nBOM492364]

By 11:22 a.m. (0552 GMT), the 30-share BSE index .BSESN
was up 0.8 percent at 14,530.18 points, with 20 stocks
advancing, after rising as much as 1.1 percent earlier.

The benchmark had fallen 6.8 percent over the past two
weeks on profit-taking after a 14-week rally that saw it jump
83 percent.

"Today we are seeing a normal bounce back after the fall,
but is not as strong as we expected," Baliga said.

Expectations are running high the government's annual
budget on July 6 will relax foreign investment rules, hike
spending on infrastructure and kick-off stake sales in
state-run firms to reduce a rising fiscal deficit and boost
slowing economic growth.

But concerns about high valuations and a delay in monsoon
rains, which are expected to be below normal for the first time
in four years, will weigh on investor confidence, analysts
said.

The June-September monsoon is a lifeline for India's
trillion-dollar economy.

"There is underlying weakness in the market. The monsoon is
a definite concern, and it is out of our control," Baliga said.

"Investors are also toning down their expectations from the
upcoming budget."

The main stock index could decline by 3 to 6 percent from
current levels by the end of 2009 as expensive valuations and
higher commodity costs temper investor optimism, a senior
strategist at Citigroup said on Wednesday. [ID:nBOM466887]

No. 2 IT-services firm Infosys rose 1.6 percent to 1,787.15
rupees, while ICICI Bank climbed 2.2 percent to 704.15 rupees.

HDFC advanced 2.2 percent to 2,360.50 rupees, while Larsen
was up 0.9 percent at 1,522 rupees.

ONGC fell 1.9 percent to 1,030.80 rupees.

In the broader section, gainers led losers by almost 3 to 1
on relatively moderate volume of 151.1 million shares.

The 50-share NSE index was up 0.5 percent at
4,312.75. More than half its components were part of block
deals as funds aligned with the index rejigged their holding
ahead of a switch to a free-float market capitalization
methodology based on the public shareholding of the firms to
calculate the weight of index stocks. [ID:nBOM216079]

Asian shares were higher on Thursday, with Japan's Nikkei
.N225 up 2.1 percent, while MSCI's measure of other Asian
markets .MSCIAPJ rose 1.5 percent.

MAIN TOP 3 BY VOLUME

* Unitech (UNTE.BO) on 9.2 million shares

* Tata Tele (TTML.BO) on 7.2 million shares

* Suzlon Energy (SUZL.BO) on 6.5 million shares

STOCKS ON THE MOVE

* Jaiprakash Hydro (JAPR.BO) rose 6 percent to 91.80 rupees
on a Business Standard newspaper report that unlisted
Jaiprakash Power Venture Ltd, a unit of Jaiprakash Associates
(JAIA.BO), is set to merge with the hydro-power company.
[ID:nBOM395099]

* Punj Lloyd (PUJL.BO) rose 2.5 percent to 214.25 rupees
after it said late on Wednesday its board approved raising up
to 15 billion rupees through the issue of securities.

FACTORS TO WATCH
* For technical analysis double click on www.reutersindia.net
* Indian rupee up as local shares rise on Asian cues
[INR/]
* Indian bonds yields up ahead of auction, U.S. cues
[IN/]
* Dollar edges off post-Fed levels, yen falls
[FRX/]
* Oil dips towards $68 on large U.S. fuel stocks build [O/R]
* Asia stocks rally on Fed, merger activity [MKTS/GLOB]
* Dow slips, but S&P, Nasdaq up after Fed, Oracle

[.N] * For closing rates of Indian ADRs

INADR (Reporting by Pratish Narayanan; Editing by
Ranjit Gangadharan)