Indian shares rise 0.9 pct; ITC, Bharti climb

* Investors bet on growth opportunities, budget worries
abate

* Fin min: will look into ways of boosting private
investment

* ITC jumps 6.8pct on no excise duty hike; Bharti rise
3.5pct
(Updates to close)

By Sumeet Chatterjee

BANGALORE, July 7 (Reuters) - Indian shares rose 0.9
percent on Tuesday as investors looked to growth opportunities,
a day after disappointment over the lack of expected reforms
and high deficit in the budget sent the market down nearly 6
percent.

"While some of the hot money may have flown out of the
Indian market yesterday, more long-term investors would take
the plunge as an opportunity to engage with the market," said
Stephen Pope, chief global market strategist at Cantor
Fitzgerald in London.
Leading cigarette maker ITC (ITC.BO) led the gains, rising
6.8 percent to 211.20 rupees, its best close in more than a
year.

Bank of America-Merrill Lynch said it had upgraded its
earnings per share estimates for ITC by 3 percent in 2009/10
and 4 percent in the next year after the budget left excise
duty on cigarettes unchanged versus its forecast of a 5 percent
increase.

Bharti Airtel (BRTI.BO) rose 3.5 percent to 810.90 rupees.
The market regulator said MTN (MTNJ.J) and its shareholders can
buy 36 percent in Bharti via global depositary receipts without
triggering a mandatory open offer. [ID:nDEL528809]

The two companies have been in exclusive talks that could
lead to a merger creating the world's No. 3 wireless group with
more than 200 million subscribers and combined revenue of $20
billion.

The main 30-share BSE index .BSESN closed up 127.05
points at 14,170.45, with 19 stocks rising. The index rose as
much as 1.5 percent in the opening deals and then fell 0.3
percent into the negative.

The benchmark had fallen 5.8 percent on Monday after the
budget fell short of expectation on infrastructure spending,
ignored financial sector reforms, raised a minimum alternate
tax for companies and set a paltry stake sale target, traders
said.

"Generally, growth opportunities in India are very strong,"
Pope said. "While the budget was for growth, some people would
have expected a little bit more from it."

He expects the BSE index to rise to 17,400 by the end of
2009.
Analysts said foreign investors bought front-line stocks on
hopes the government would continue with key reforms despite
not spelling out a clear roadmap in the budget.

The government wants foreign investors to fund as much as
half of the $20 billion a year it has earmarked for building
roads, Transport Minister Kamal Nath said. [ID:nCOL393997]

"We are looking at all funds. We are looking at sovereign
wealth funds, we are looking at private equity, we are looking
at pension funds," he told Reuters, a day after the budget
included a 23 percent increase in funding for national
highways.

Engineering and construction firm Larsen & Toubro (LART.BO)
rose 2.5 percent to 1,500.85 rupees, after the budget increased
spending on infrastructure sectors, traders said. The stock had
dropped nearly 9 percent on Monday.

Finance Minister Pranab Mukherjee said the government would
look into ways of boosting private investment as it wanted to
lift growth. [ID:nBMA003292]

"The budget content was not as bad as it was made out to
be," Samir Arora, who manages nearly $200 million in Indian
equities at Singapore-based fund Helios Capital, said. "I have
a positive bias on the market and waiting for the things to
happen."

Citigroup said Monday's sharp fall was a result of factors
like fairly high expectations on investments, taxes and policy
impetus.

"While we believe expectations weren't specific enough and
were in nature fairly generalised, the lack of big bold policy
and investment announcements probably came as a
disappointment," it said in a report.

"We don't believe there are any fundamental shortcomings of
the budget on this count -- just a possible let-down against a
backdrop of high expectations."

The BSE index is up about 47 percent so far this year,
after a three-quarters rally from its 2009 low in early March.

The trend was, however, negative in the broader market with
1,478 losers ahead of 1,073 gainers on relatively moderate
volume of 378 million shares.

The broader 50-share NSE index ended up 0.87
percent at 4,202.15.

MAIN TOP 3 STOCKS BY VOLUME

* Reliance Natural Resources (RENR.BO) on 19 million shares

* Unitech Ltd (UNTE.BO) on 17 million shares

* Suzlon Energy (SUZL.BO) on 15 million shares

STOCKS THAT MOVED

* Energy giant Reliance Industries (RELI.BO), which has the
highest weighting in the main index, fell 2 percent to 1,855.35
rupees, taking its losses to 8.4 percent in two days. Citigroup
said a rise in minimum alternate tax was negative for Reliance.

* Mid-cap IT services firms such as MphasiS (MBFL.BO),
Patni Computer Services (PTNI.BO) and Mindtree (MINT.BO) rose
between 3 and 6 percent after the budget extended the tax
holiday on units located in software technology parks by one
year to FY2011.

Analysts say the extension would benefit smaller IT
services firms more than the large companies such as Infosys
Technologies (INFY.BO) and Tata Consultancy Services (TCS.BO).

FACTORS TO WATCH
* For technical analysis, double click on
www.reutersindia.net
* Indian shares gain but rupee, bonds struggle
[INR/]
* Indian shares gain but rupee, bonds struggle
[IN/]
* Euro hits day's high vs dlr after strong German data
[FRX/]
* Oil rallies above $64 after four-day fall
[O/R]
* World stocks tick lower on recovery doubts
[MKTS/GLOB]
* U.S. stock futures signal losses as oil slips again
[.N]
* For closing rates of Indian ADRs
INADR
(Editing by Ranjit Gangadharan)