Indian shares rise 0.2 pct; Tata Steel, HDFC gain

* Investor confidence remains strong on recovery hopes

* Metal firms gain on firm prices; ICICI, State Bank rise

* Profit-takers target HDFC Bank, Reliance Infrastructure
(Updates to close)

By Pratish Narayanan

MUMBAI, June 2 (Reuters) - Indian shares eked out a 0.2
percent rise on Tuesday after spending most of the day in
negative territory as resistance emerged after a near 85
percent rally since early March.

Traders said firm underlying sentiment on signs of a global
economic recovery helped bolster the market towards the close.

Private-sector lender HDFC Bank (HDBK.BO), Reliance
Infrastructure (RLIN.BO) dropped after running up sharply over
the past 2-½ months.

Tata Steel (TISC.BO) and non-ferrous metal producer
Sterlite Industries (STRL.BO) climbed on firm metal prices.

Leading lenders State Bank of India (SBI.BO) and ICICI Bank
(ICBK.BO) and top mortgage firm Housing Development Finance
Corp (HDFC.BO) also rose on signs of improving global economic
health.

The 30-share BSE index .BSESN ended up 0.23 percent, or
34.28 points, at 14,874.91, with 14 stocks gaining, after
falling as much as 1.6 percent at one stage.

"It has been a fantastic rally. People who bought shares
when the index was at 8,000 points may be coming to sell,"
Harendra Kumar, head of research at Centrum Broking, said.

The benchmark is up 54 percent this year after sliding more
than half in 2008.

"Sentiment is still quite good. Whenever shares fall,
people see value in stocks. There is a readiness to buy even
now," Kumar said.

A string of positive manufacturing data on Monday from
India, China, Europe and the United States showed signs there
were green shoots appearing in the global economy, analysts
said.

Foreign funds have bought about $6 billion of Indian shares
since mid-March as risk appetite picked up and the excess cash
in the system is expected to drive inflows.

The Standard & Poor's 500 Index .SPX hit a milestone on
Monday, ending above its 200-day moving average for the first
time since December 2007, a feat that some analysts took as
possibly a harbinger of more gains ahead. [ID:nN01337811]

Hopes India's re-elected ruling coalition will push
pro-market reforms such as assets sales in state firms and
relax foreign investment rules in insurance and pensions have
boosted investor confidence, traders said.

Government-run State Bank of India, the country's top
lender, advanced 1.6 percent to 1,909.50 rupees, while rival
ICICI Bank gained 1.3 percent to 732.45 rupees. Housing
Development Finance Corp climbed 4.2 percent to 2,394.95
rupees.

Tata Steel jumped 8.2 percent to 474.05 rupees and Sterlite
rose 3.9 percent to 690.50 rupees.

HDFC Bank eased 2.4 percent to 1,398.45 rupees, after
soaring 81 percent since early March. Reliance Infrastructure
dropped 4.3 percent to 1,244.45 rupees after nearly tripling in
value over the past 2-½ months.

State-run explorer Oil and Natural Gas Corp (ONGC.BO) slid
0.8 percent to 1,167.15 rupees after India's oil secretary said
the government had no plans to sell a stake in the firm.

In the broader section, gainers led losers 1,701 to 1,122
on relatively heavy volume of 894 million shares.

The 50-share NSE index fell 0.1 percent to
4,525.25.

MAIN TOP 3 BY VOLUME

* Satyam Computer (SATY.BO) on 68.6 million shares

* Essar Oil (ESRO.BO) on 57.8 million shares

* Ispat Industries (ISPT.BO) on 47 million shares

STOCKS THAT MOVED

* Sugar firms such as Shree Renuka Sugars Ltd (SRES.BO),
Balrampur Chini (BACH.BO), Bajaj Hindusthan Ltd (BJHN.BO) and
Oudh Sugar (OUDH.BO) gained 1-6 percent on speculation mills
will get more time to sell their unsold non-levy stocks from
May, traders said.

Non-levy, or free sale sugar, is sold by millers in the
open market, but the quantity each mill can sell is fixed by
the federal government.

* Great Offshore (GOFS.BO) fell 2.8 percent to 363.35
rupees on concerns an open offer for a 20 percent holding by
Bharati Shipyard (BHAR.BO) may be priced lower than the current
market price, dealers said.

* Ambuja Cements Ltd (ABUJ.BO) climbed 2.4 percent to
100.35 rupees after the company reported on Monday an 8.3
percent rise in May shipments from a year earlier.
[ID:nBMA003037]

FACTORS TO WATCH
* For technical analysis double click on www.reutersindia.net
* Indian rupee extends drop as stx fall; dlr gains
[INR/]
* Indian bond yields steady; borrowing clarity awaited
[IN/]
* Dollar off year's lows but sentiment bearish
[FRX/]
* Oil falls toward $68 from seven-month high [O/R]
* World stocks slip after recent gains [MKTS/GLOB]
* U.S. stock index futures point to lower open

[.N] * For closing rates of Indian ADRs

INADR (Editing by Ranjit Gangadharan)