Indian shares choppy; Infosys gains, Bharti drops

* Resistance after BSE index rises 73 pct since early March

* Short-covering ahead of derivatives expiry limits losses

* Infosys rises as rupee weakens for second day

* Bharti falls for 2nd day after reviving MTN merger talks
(Updates to late morning)

MUMBAI, May 26 (Reuters) - Indian shares flip-flopped on
Tuesday as short-covering ahead of expiry of monthly
derivatives contracts later this week was followed by bouts of
profit-taking after an almost three-quarters rally since early
March.

Outsourcer Infosys Technologies (INFY.BO), which gets most
of its revenue from overseas, rose as the rupee dropped for a
second day on the back of the dollar's gains overseas. [INR/]

Top telecoms firm Bharti Airtel (BRTI.BO) fell for the
second day after it said its plan to buy a 49 percent stake in
South Africa's MTN (MTNJ.J) would initially dilute its
earnings. [ID:nSP477731]

By 11:28 a.m. (0558 GMT), the 30-share BSE index .BSESN
was down 0.1 percent at 13,898.08 points, with 12 stocks
declining, after opening up 0.5 percent.

"This is a balancing act between the bulls and the bears.
The market is waiting for some news to give it a clear-cut
direction," R.K. Gupta, managing director of Taurus Mutual
Fund, said from New Delhi.

"That direction will come only when the government
announces the new budget probably next month."

The benchmark had risen 73 percent from a 2009 low in early
March through Monday, riding a global rally, and boosted by
hopes a new stable government will be able to push pro-market
reforms.

Leading mortgage lender Housing Development Finance Corp
(HDFC.BO) was among the other major gainers, rising 2.4 percent
to 2,138 rupees.

Infosys, the country's No. 2 IT-services firm, advanced 2.5
percent to 1,545 rupees, while smaller rival Wipro (WIPR.BO)
rose 0.8 percent to 369.50 rupees.

Reliance Industries (RELI.BO), which has the most weight in
the main index, dropped 1.3 percent to 2,166 rupees, after
almost doubling in value since early March.

Bharti fell 4 percent to 778.65 rupees, extending Monday's
5.4 percent drop.

In the broader section, gainers led losers by more than 3
to 1 on relatively heavy volume of 315.1 million shares.

The 50-share NSE index was down 0.4 percent at
4,219.

MAIN TOP 3 BY VOLUME

* Satyam Computer (SATY.BO) on 10.4 million shares

* Ispat Industries (ISPT.BO) on 9.5 million shares

* Reliance Natural Resources (RENR.BO) on 7 million shares

STOCKS ON THE MOVE

* Ranbaxy Laboratories (RANB.BO) fell 3.5 percent to 257.50
rupees after the Mint newspaper said the drugmaker could take a
hit of as much as $50 million due to a delay in supplying a key
ingredient to UK's AstraZeneca (AZN.L) used to make anti-ulcer
drug, Nexium.

The company could not be immediately reached for comment.

The stock had jumped 21 percent on Monday after its
Japanese parent Daiichi Sankyo (4568.T) replaced the Indian
firm's chairman and chief executive.

* Dishman Pharmaceuticals (DISH.BO) surged 20 percent to
174.40 rupees after it forecast revenue and net profit growth
of 15-20 percent for 2009/10 as it expected orders to come in
the later half of the year. [ID:nBOM491001]

* Spanco Telesystems (SPTS.BO) gained 8.5 percent to 58.50
rupees after 1.09 million shares, or 5.27 percent of its
equity, changed hands in a block deal on the BSE.

* Tantia Construction (TANC.BO) rose 5 percent to 54.10
rupees after it won a project worth 581.6 million rupees to
construct a bridge over river Damodar in east India.

FACTORS TO WATCH
* For technical analysis double click on www.reutersindia.net
* Indian rupee drops on dollar's gains overseas
[INR/]
* Indian bond yields ease on bargain buying
[IN/]
* Dollar off 5-month low, U.S. debt auctions awaited
[FRX/]
* Oil falls below $61 ahead of OPEC, N.Korea tension
[O/R]
* Asian shares feel pressure on N.Korea tension [MKTS/GLOB]
* Wall St slips late as budget worries linger

[.N] * For closing rates of Indian ADRs

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