Indian shares rise 1 pct; Reliance, autos gain

* Manufacturing data reinforces recovery signs

* Trading choppy ahead of Monday budget

* Autos climb on double-digit sales growth in June

* Hindalco drops 3.5 pct after 2008/09 profit slumps
(Updates to close)

By Prashant Mehra

MUMBAI, July 1 (Reuters) - Indian shares rose 1 percent on
Wednesday after data reinforced signs of an economic recovery,
but trading was choppy as investors took profits ahead of an
updated budget next week.

Gains were led by Reliance Industries (RELI.BO) after the
energy giant said it could not sign a deal to sell gas at below
state-set prices to a former group firm without the
government's approval. [ID:nBOM515009]

Auto shares climbed after top car maker Maruti Suzuki
(MRTI.BO), leading utility vehicles producer Mahindra &
Mahindra (MAHM.BO) and motorcycle maker Hero Honda Motors
(HROH.BO) all reported double-digit sales growth in June.

Hindalco Industries (HALC.BO) fell 3.5 percent to 83.40
rupees after the top aluminium producer posted a 78 percent
slump in 2008/09 consolidated profit. [ID:nBOM497773]

Manufacturing activity expanded for a third straight month
in June, albeit at a slightly slower pace, reflecting strong
local demand, data showed on Wednesday. [ID:nDEL486405]

Still, investors only took trading positions as they
awaited policy direction from the budget on Monday, traders
said.

"There has already been a good run-up in the market, and
people are going for safe positions so they can deal with any
unexpected negativity," said Tejas Doshi, head of research at
Sushil Finance.

The 30-share BSE index .BSESN rose 1.05 percent, or
151.63 points, to 14,645.47 points, with 25 components closing
higher. It slipped nearly 1 percent in the afternoon before
pulling back.

The benchmark had rallied by almost half during April-June
in their best quarterly gain in 17 years, but investors are
wary their expectations on the budget may be too high.

"The volumes are strong, but people are taking more daily
positions. Future direction should only be known after the
budget measures," said K.K. Mital, chief executive for
portfolio management services at Globe Capital Market.

Finance Minister Pranab Mukherjee is likely to announce
plans to sell shares in some state run firms to help fund rural
and social programmes, but the cash-strapped government could
expand the budget deficit and its market borrowing.
[ID:nDEL336363]

Reliance Industries, which has the heaviest weight in the
main index, rose 1.7 percent to 2,057.35 rupees after its
statement late on Tuesday on the gas deal eased concerns its
profits could be affected.

Financial stocks rose in anticipation of budget moves to
help attract more investments in the sector.

Top lender State Bank of India (SBI.BO) firmed 2.2 percent
to 1,779.80 rupees, ICICI Bank (ICBK.BO) gained 1 percent to
729.25 rupees and HDFC Bank (HDBK.BO) added 0.7 percent to
1,502 rupees.

Mahindra & Mahindra rallied 3.2 percent to 714.35 rupees
after its June sales rose 19 percent, while Maruti gained 0.4
percent to 1,070.15 rupees as its sales climbed 23 percent.

Top vehicles maker Tata Motors (TAMO.BO), expected to
report monthly numbers later Wednesday, was up 2.8 percent at
299.30 rupees.

Consumer goods maker Hindustan Unilever (HLL.BO) closed up
2.1 percent at 272.70 rupees, after hitting a 52-week high of
275.20 as investors bet strong local demand would boost
revenues. In the broader market, losers outpaced gainers in
the ratio of 1.06:1, on above-average volume of 373.5 million
shares.

The 50-share NSE Index was up 1.16 percent at
4,340.90 points.

TOP 3 STOCKS BY VOLUME

* Unitech (UNTE.BO) on 20.6 million shares

* Ispat Industries (ISPT.BO) on 19 million shares

* Suzlon Energy (SUZL.BO) on 18.7 million shares

STOCKS THAT MOVED

* Power equipment maker Areva T&D India (AREV.BO) rose 7.9
percent to 363.30 rupees after parent Areva (CEPFi.PA) said
late on Tuesday its board approved sale of its global power
transmission and distribution (T&D) business.

* Shipping Corp of India Ltd (SCI.BO) rose 7.3 percent to
133.70 rupees after the federal shipping minister said the
government would examine divestment in the state-run firm.

* GMR Infrastructure (GMRI.BO) extended losses for the
second straight session, falling 1.2 percent to 139.95 rupees,
a day after it withdrew a share sale to institutions citing
adverse market conditions. [ID:nBOM492517]

FACTORS TO WATCH
* For technical analysis, double click on
www.reutersindia.net
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[ID:nBOM519742]
* Indian rupee eases as dlr up, equities check losses
[INR/]
* Indian bond yields down on lower borrowing hopes
[IN/]
* Euro inches up, supported by PMIs, higher shares
[FRX/]
* World stocks begin Q3 on upbeat note, oil rises
[MKTS/GLOB]
* Oil above $71 on inventory drop, Nigeria
[O/R]
* U.S. stock index futures point to higher start
[.N]
* For closing rates of Indian ADRs
INADR
(Editing by Ranjit Gangadharan)