Reliance, ONGC help Indian shares beat Asian fall

* Main index ends flat after falling 2.2 pct at one stage

* Undercurrent shaky as global economic worries remain

* ICICI Bank, HDFC Bank, ITC, L&T among major losers

* Investors cautious ahead of budget on July 6
(Updates to close)

By Pratish Narayanan

MUMBAI, June 23 (Reuters) - Indian shares rebounded from an
early slide and ended little changed on Tuesday, propelled by
gains in energy giant Reliance Industries (RELI.BO) and
explorer Oil and Natural Gas Corp (ONGC.BO).

Still, the market's undercurrent was weak as worries that
the nascent recovery in the global economy has been priced into
equity markets worldwide hit investor confidence across Asia.

"Valuations in the market are not cheap. To justify such
prices, the government needs to come out with big-bang
reforms," Gopal Agrawal, head of equity at Mirae Asset Global
Investment Management (India), said.

"Till that happens, the market will see volatility as there
are no other major drivers right now."

The 30-share BSE index .BSESN ended down 0.02 percent, or
2.21 points, at 14,324.01, after falling 2.2 percent at one
stage. Seventeen stocks declined.

But Reliance Industries, which has the most weight in the
index, rose 3.3 percent to 2,016.05 rupees after falling 17.2
percent since last Monday when it received an unfavourable
court ruling on gas supplies. [ID:nBOM433343]

It was helped after the head of NTPC Ltd (NTPC.BO) said the
utility was open to buying Reliance's gas at $4.2 per million
metric British thermal unit except for the plants under dispute
in a court. NTPC shares rose 2.5 percent to 195.85 rupees.
[ID:nBMA003195]

Oil and Natural Gas Corp (ONGC.BO) gained 3.3 percent to
1,026.45 rupees after the Economic Times said the state-run
explorer struck oil and gas in three new blocks.
[ID:nBOM490661]

The major losers were private-sector lenders ICICI Bank
(ICBK.BO) and HDFC Bank (HDBK.BO), engineering and construction
firm Larsen & Toubro (LART.BO) and diversified cigarette maker
ITC Ltd (ITC.BO).

The benchmark index had dropped 7.4 percent in the previous
eight sessions as investors took profits on a 14-week, 83
percent rally that was halted last week on concerns about
rising valuations.

Foreign funds, which had pumped almost $8 billion into the
market since mid-March through June 12 when the benchmark hit a
2009 high, pulled out more than $350 million last week.

Still, expectations for reforms such as relaxation of
foreign investment rules in the insurance and pension sectors
and stake sales in state-run firms when the government
announces the budget on July 6 should provide support, analysts
said.

"There is not much scope for the market to fall much more,"
said Amitabh Chakraborty, president of equities at Religare
Securities. "A lot of the stocks like Reliance have been
oversold over the past week."

Other Asian indexes fell steeply, with Japan's Nikkei
.N225 and the MSCI's measure of other Asian markets
.MSCIAPJ each sliding 2.8 percent.

U.S. stocks suffered their worst one-day loss in two months
on Monday in a broad-based sell-off, as investors reconsidered
the health of the economy.

A recovery from a severe recession in the euro zone's
services sector stalled in June as consumers remained nervous,
but factories fared better as they ran down stocks, key surveys
showed on Tuesday. [ID:nLN873343]

ICICI Bank fell 4.1 percent to 697.45 rupees, while ITC
slid 3.1 percent to 196.50 rupees.

HDFC Bank dropped 3.6 percent to 1,485.55 rupees, while
Larsen eased 1.6 percent to 1,485.95 rupees.

In the broader market, losers led gainers 1,466 to 1,123 on
relatively moderate volume of 405.5 million shares.

The 50-share NSE index rose 0.3 percent to 4,247.

MAIN TOP 3 BY VOLUME

* Unitech (UNTE.BO) on 23.8 million shares

* IFCI (IFCI.BO) on 22.7 million shares

* Suzlon Energy (SUZL.BO) on 22.1 million shares

STOCKS THAT MOVED

* IRB Infrastructure (IRBI.BO) rose 5.9 percent to 148.15
rupees after the company said it emerged as the lowest bidder
for a highway project in Rajasthan worth an estimated 15
billion rupees ($307.3 million).

* Great Offshore Ltd (GOFS.BO) rose 7.9 percent to 413.60
rupees after shipbuilder ABG Shipyard (ABGS.BO) offered to buy
a stake in the firm at 375 rupees per share, countering a bid
of 344 rupees by rival Bharati Shipyard (BHAR.BO).
[ID:nBOM528371]

FACTORS TO WATCH
* For technical analysis double click on www.reutersindia.net
* Indian rupee at 5-week low as stocks drop
[INR/]
* Indian bond yields down on US cues
[IN/]
* Euro up vs dollar as shares stabilise; FOMC eyed
[FRX/]
* Oil falls below $67 on economic outlook [O/R]
* Europe extends global slide in stocks, oil [MKTS/GLOB]
* Stock index futures point to higher Wall St open

[.N] * For closing rates of Indian ADRs

INADR (Editing by Ranjit Gangadharan)