Indian shares rally 5.1 pct; Reliance, banks up

* Biggest rise since early Dec, best close in 5 weeks

* U.S. plan for toxic assets boosts investor confidence

* Reliance Industries rallies 7.6 pct, financials jump

* Metals climb, Tata Motors rise ahead of Nano launch
(Updates to close)

By Prashant Mehra

MUMBAI, March 23 (Reuters) - India's main stock index
rallied 5.1 percent on Monday, its biggest one-day rise since
early December, after a fresh U.S. rescue package for the
financial sector boosted investor confidence across Asia.

Battered financial shares that had been on the mend in the
past two weeks were among the main gainers, as the U.S. plan to
buy up to $1 trillion of toxic assets from banks bolstered
global sentiment towards the sector.

Reliance Industries (RELI.BO), which has the heaviest
weight in the main index, rallied 7.6 percent to 1,439.80
rupees, its best close since last Nov. 4, as the energy giant
readies to begin gas supplies from its Krishna Godavari basin
field off India's east coast.

Tata Motors (TAMO.BO), India's largest vehicle maker, rose
3.2 percent to 166.05 rupees ahead of the launch of its Nano,
slated to be the world's cheapest car at around $2,000.
[ID:nBOM410246]. It rose more than 8 percent during trade.

The 30-share BSE index .BSESN, rose 457.34 points to
9,424.02, its highest close since Feb. 13, with all but one
component rising.

The benchmark, which had gained more than 7 percent in the
past two weeks, has trimmed its losses in 2009 to 2.3 percent.

Deven Choksey, managing director of K R Choksey Shares,
said the rally was unexpected and was prompted by the world
market recovery and partly by the rupee's rebound after hitting
an all-time low earlier this month.

"This is out of the blue, but I think it will help bring
some stability to our market," he said.

Markets across Asia and Europe climbed and U.S. stocks
futures were set to rally after Washington's latest move to
cleanse the U.S. banking system of toxic assets that were
blocking lending and worsening a deep U.S. recession.
Top lender State Bank of India (SBI.BO) climbed 7.3 percent to
1,023.45 rupees, ICICI Bank (ICBK.BO) added 7.4 percent to
346.65, HDFC Bank (HDBK.BO) gained 5.6 percent to 884.65, while
Housing Development Finance Corp (HDFC.BO) rose 8.4 percent to
1,528.80 rupees.

Commodity stocks rose as metal prices rallied in London and
Shanghai.

Tata Steel (TISC.BO) jumped 10.4 percent to 194.40 rupees,
Hindalco Industries (HALC.BO) gained 9.4 percent to 52.05 and
Sterlite Industries (STRL.BO) added 5 percent to 331.40 rupees.

State-run explorer Oil and Natural Gas Corp (ONGC.BO) rose
5.4 percent to 795.45 rupees as crude oil prices rose toward
$53 a barrel, after having fallen below $35 just last month.

Drugmaker Ranbaxy Laboratories Ltd (RANB.BO) climbed 10.8
percent to 161.05 rupees after regulators in the UK and
Australia approved a manufacturing facility in north India that
was earlier the target of U.S. regulatory action.
[ID:nDEL431677]

Largest listed developer DLF (DLF.BO) was the only loser
among the index stocks, falling 2.2 percent to 167.40 rupees,
after the Business Standard reported the company would acquire
DLF Asset from the founders at an enterprise value of about 70
billion rupees.

In the broader market, advances led declines in the ratio
of 1.8:1 on moderate volume of 301 million shares.

The 50-share NSE index rose 4.73 percent to
2,939.90, its highest close since Feb. 13.

MAIN TOP 3 BY VOLUME

* Ballarpur Industries (BILT.BO) on 17.8 million shares
* Suzlon Energy (SUZL.BO) on 10.6 million shares

* Reliance Natural Resources RNRL.BO on 9.9 million
shares

STOCKS THAT MOVED

* Religare Enterprises (RELG.BO) rose 8.4 percent to 352.55
rupees after the financial services firm said its board would
reconsider on March 25 terms of a proposed rights issue.
[ID:nBOM308445]

* Subhash Projects & Marketing Ltd (SUBH.BO) rose 13.8
percent to 53.20 rupees after the company won a contract worth
4.92 billion rupees to build an underground sewerage system.

* Chemicals maker Hikal Ltd (HIKA.BO) rose 7.4 percent to
169 rupees after the company said its board would consider on
March 25 absorbing its unit, Hikal Pharmaceuticals Ltd.

FACTORS TO WATCH
* For technical analysis double click on www.reutersindia.net
* Indian rupee up on capital inflow hopes; weak dlr
[INR/]
* Indian bond yields at 1-wk high on borrowing worries
[IN/]
* FOREX-Dlr falls as toxic asset plan boosts sentiment
[FRX/]
* Oil up near $53, weak dollar supports
[O/R]
* U.S. toxic debt plan lifts shares, dollar down
[MKTS/GLOB]
* U.S. stock futures signal rally on debt plan hopes
[.N]
* For closing rates of Indian ADRs
INADR
(Editing by Ranjit Gangadharan)