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MUMBAI (Reuters) - Indian shares rose 1.5 percent on Friday as domestic funds began picking bargains after the market had tumbled 15 percent in the past two weeks, but high oil prices and inflation were a concern.
Traders said sentiment was underpinned by expectations the government would win over a regional party to help keep its parliamentary majority if the coalition's left allies withdraw their support.
"We have had no bad news today and there could be some clarity on the political front," Dipak Acharya, fund manager at BoB Asset Management Co, said.
Top listed firm Reliance Industries, which enjoys the highest weightage in the main index, rose 1.5 percent to 2,101.80 rupees, after losing more than 6 percent in the past two weeks.
No. 2 mobile operator Reliance Communications climbed 3.3 percent to 402.50 rupees on expectation South Africa's MTN may extend talks beyond the 45 days that ends on July 8 to forge a tie-up between the two.
At 11:10 a.m., the bechmark 30-share index was up 1.52 percent, or 199.25 points, at 13,293.76. It rose more than 2 percent in early deals but was down 34.5 percent so far in 2008.
In the broader market, 1,157 gainers led 945 losers on volume of 83 million shares.
"There are quite a few bargains waiting to be picked up and we were ripe for a technical pullback too," Acharya said.
Leading construction and engineering firm Larsen & Toubro rose 2.8 percent to 2,296 rupees, after falling 12.6 percent in the past two weeks.
India's left parties could decide on Friday when to withdraw support to the government in protest against a U.S. civilian nuclear deal, but the coalition appeared closer to winning support from a regional party.
Traders said inflation and high oil prices were a concern.
Annual inflation is expected at 11.63 percent in the week ended June 21, newspapers and televisions channels said, higher than market expectations for 11.44 percent. The data is due at noon.
Oil, India's biggest import, was trading above $145 a barrel after smashing records five times in the past seven sessions on tensions between Israel and Iran.
Tata Steel, the world's sixth-largest steel maker, was the only loser in the index dropping 1 percent to 650.60 rupees after producers pledged to drop prices of some products by up to 10 percent under pressure from the government.
The 50 share NSE index was up 0.97 percent at 3,963.80.
Elsewhere in the region, Karachi's 100 share index fell 0.64 percent to 11,958.76 and Sri Lanka's Colombo All share index eased 0.31 percent to 2,412.59.
STOCKS ON THE MOVE
* Archidply Industries was trading at 53.50 rupees on debut versus its issue price of 74 rupees.
* Construction and engineering firm Punj Lloyd rose 5.75 percent to 211.60 rupees after it said on Thursday it had won a 10.05-billion-rupee order from GVK Power.
* Diversified Jain Irrigation rose 3.5 percent to 452 rupees after 3.53 percent of the company changed hands in a block deal at 442 rupees on the BSE.
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