Indian shares rally 4 pct; banks, energy gain

* One-off waiver for nuclear trade boosts sentiment

* Tata Motors up after farmers call off protest at Nano
plant

* U.S. mortgage takeover lifts banks
(Updates to mid-morning)

NEW DELHI, Sept 8 (Reuters) - Indian shares rallied more
than 4 percent on Monday after a global atomic cartel lifted a
ban on nuclear trade, raising hopes for large foreign
investment in the in the energy-hungry nation.

After two weeks of meetings and long-distance
consultations, the 45-member Nuclear Suppliers Group (NSG)
nations on Saturday adopted a one-off waiver allowing them to
do business with India. [ID:nL6267956]

Shares in power producer NTPC Ltd (NTPC.BO), equipment
maker Bharat Heavy Electricals (BHEL.BO) and infrastructure
play Larsen & Toubro (LART.BO) rose about 6 percent each as
investors expected these firms to clinch tie-ups for nuclear
energy deals.

Industry lobby group Confederation of Indian Industry said
it expected about $27 billion investment in nuclear power in
the next 15 years.

By 10:45 a.m. (0515 GMT), the 30-share main BSE index
.BSESN was up 3.77 percent, or 545.57 points, at 15,029.40,
with all but one of the components gaining.

The benchmark rose as much as 4.3 percent in early trade,
but is down more than a quarter so far this year.

Banks rose on optimism the damage of the global financial
crisis would be moderated after Washington took over top
mortgage firms Fannie Mae and Freddie Mac, which also triggered
a rally elsewhere in Asia.

"The market should perform now I think. On the broader
economic side, inflation is showing signs of moderation. Oil
has come down drastically. Things look better overall," said
Neeraj Dewan, a director at Quantum Securities.

India's annual inflation is still running at above 12
percent, but has come off its peak and data released on
Thursday showed a second week of easing to 12.34 percent in the
week ended Aug. 23.

Oil prices rose more than $2 a barrel to $109, but are
sharply down from a peak above $147 hit in July. India imports
about 70 percent of its oil and high energy prices had been a
key factor behind double-digit inflation.

Shares in Tata Motors (TAMO.BO) climbed 4.1 percent to
436.95 rupees after farmers called off a protest, raising hopes
the company would resume work at a plant that would make the
Nano car. [ID:nBOM289079]

ICICI Bank (ICBK.BO) was up 6.1 percent at 729.50 rupees
and larger rival State Bank of India (SBI.BO) gained 4.5
percent to 1,587.50 rupees.

In the broader market, 1,548 gainers were ahead of 457
losers on volume of about 55 million shares.

The 50-share NSE index was up 3.58 percent at
4,507.95.

Elsewhere in the region, Karachi's 100-share index
was down 0.44 percent at 9,300.82 after opening higher, but
Colombo's All-share index .CSE gained 0.23 percent to
2,403.90.

STOCKS ON THE MOVE

* Tech Mahindra (TEML.BO) was up 2.5 percent at 776.90
rupees after the Economic Times reported private equity firms
including Kohlberg Kravis Roberts & Co (KKR) were eyeing BT
Group's (BT.L) 31 percent stake in the Indian software services
firm. [ID:nBOM331269]

* Power sector Areva T&D (AREV.BO) rose 5.6 percent to
1,716 rupees, Tata Power (TTPW.BO) added 4.4 percent to
1,127.65 and ABB Ltd (ABB.BO) gained 3.3 percent to 903 rupees
on the nuclear trade waiver.

* Shares in back-office service provider Firstsource
(FISO.BO) rose 3.6 percent to 46.15 rupees after the Financial
Times reported a stake in the firm had been put up for sale and
first-round bids were expected this month.

TOP THREE BY VOLUME

* Reliance Natural Resources (RENR.BO) on 2.6 million
shares

* Reliance Power (RPOL.BO) on 2.6 million shares

* Austral Coke (ACPL.BO) on 2.4 million shares

FACTORS TO WATCH
* Indian rupee up 1 pct on stocks rally, inflow hopes
[INR/]
* Indian bond yields off early peaks, worries linger
[IN/]
* FOREX-Dollar dips vs euro after Freddie, Fannie bailout
[FRX/]
* Oil surges $2 to near $109 on hurricane threat
[O/R]
* GLOBAL MARKETS-Fannie, Freddie bailout whets hunger for risk
[MKTS/GLOB]
* US STOCKS-Futures soar after U.S. takes over GSEs
[.N]
* For closing rates of Indian ADRs
INADR
(Reporting by Devidutta Tripathy; Editing by Ranjit
Gangadharan)