Indian shares rise 1.6 pct; Reliance, ICICI up

* Investors betting on victory for one of two main
coalitions

* Higher Asian markets, overnight Wall Street rally help

* Reliance, ICICI, L&T lead gains
(Updates to mid-morning)

MUMBAI, May 15 (Reuters) - Indian shares rose 1.6 percent
on Friday, tracking strong Asian markets and as investors hoped
one of the two major national coalitions would gain power after
general election results on Saturday.

The market had fallen more than 2 percent over the past two
sessions as investors worried a weak coalition would face
hurdles to push reforms needed to boost slowing economic growth
and cut a growing fiscal deficit.

But with dwindling prospects of a government that does not
include either one of the two main national parties -- the
ruling Congress party and the opposition Bharatiya Janata Party
-- may have calmed investors, analysts said.

"No one knows who will win, not even the people who stood
for elections, but people are being overly negative. Maybe the
market has factored in the worst," Gul Teckchandani, an
independent investment strategist, said.

"If the prices are good, I'll still buy."

By 11:17 a.m. (0547 GMT), the 30-share BSE index .BSESN
was up 1.6 percent at 12,058.36 points, with 27 stocks
advancing.

Private-sector lender ICICI Bank (ICBK.BO), energy giant
Reliance Industries (RELI.BO) and engineering and construction
firm Larsen & Toubro (LART.BO) led the gains.

Strong markets across Asia following a rise on Wall Street
overnight also helped, traders said. Japan's Nikkei .N225 was
up 1.9 percent, while MSCI's measure of other Asian markets
.MSCIAPJ rose 2 percent.

"The focus is now definitely on global cues, as the market
is discounting the possible election results," R.K. Gupta,
managing director of Taurus Mutual Fund, said.

The BSE index has rebounded about half from its March low,
taking gains this year to around a quarter, following a pick up
in global risk appetite.

Foreign funds have moved more than $1.8 billion into Indian
stock so far this month, after net inflows of $1.5 billion in
April.

Reliance Industries, which has the biggest weight in the
main index, rose 1 percent to 1,927.90 rupees. ICICI Bank
gained 3.4 percent to 555 rupees, while L&T climbed 2.9 percent
to 973.90 rupees.

Oil & Natural Gas Corp (ONGC.BO) fell 1.8 percent to 817
rupees, after the Economic Times said the state-run explorer
could report a drop in 2008/09 profit as the federal government
plans to ask it to bear a bigger subsidy burden to compensate
state fuel retailers who sell fuel at state-set low prices.

In the broader market, gainers led losers 3 to 1 on
relatively moderate volume of 119.9 million shares.

The 50-share NSE index was up 1.3 percent at
3,640.35.

MAIN TOP 3 BY VOLUME

* Unitech (UNTE.BO) on 4.9 million shares

* Suzlon Energy (SUZL.BO) on 3.9 million shares

* Development Credit Bank (DCBA.BO) on 3.7 million shares

STOCKS ON THE MOVE

* Tata Tea Ltd (TTTE.BO), Harrisons Malayalam (HRMA.BO) and
Jayshree Tea & Industries Ltd (JYST.BO) were up 5-12 percent
after media reports said regional and national tea marketing
companies decided to raise prices by 20 rupees per kg on a
supply shortfall in major producing regions.

* Battery maker Eveready Industries India Ltd (ERDY.BO)
rose 7.5 percent to 27.30 rupees after the company said late on
Thursday it plans to acquire 80 percent of France-based battery
maker Uniross SA through an overseas joint venture.

FACTORS TO WATCH
* For technical analysis double click on www.reutersindia.net
* Indian rupee up as stocks gain; poll outcome eyed
[INR/]
* Indian bond yields up; election outcome eyed
[IN/]
* Dollar on defensive but euro, others lack punch
[FRX/]
* Oil steadies below $59/bbl, eyes equities, dollar [O/R]
* Recovery hopes still alive, Asia stocks rise [MKTS/GLOB]
* Wall Street boosted by return to banks, tech

[.N] * For closing rates of Indian ADRs

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