Indian shares rose 1.5 percent on Tuesday and propelled the main index to its first quarterly gain since 2007, as easing concerns about the global economy revived investor appetite and sparked a worldwide rally in March. The BSE index .BSESN firmed 9.2 percent in March, its first gain in three months and the best show since last April. It rose 0.6 percent in the quarter, making it one of the top-five performers among major indexes in the world, but well below China's .SSEC 30 percent jump. Automakers Maruti Suzuki (MRTI.BO) and Mahindra & Mahindra (MAHM.BO) powered the quarterly rise as lower interest rates pushed their sales up even in the face of a slowing economy. Energy giant Reliance Industries (RELI.BO), which has the biggest weight in the main index, was another major market mover as it gets set to pump gas from its field off India's east coast. "I don't think this rally has strong legs. Companies are not talking about earnings growth and there is no clarity on the political front," V.P. Chaturvedi, who helps manage about $5 billion in assets at Tata Asset Management Ltd, said. The 30-share main index ended up 1.47 percent, or 140.36 points, at 9,708.50, with 25 stocks gaining. Trading was volatile with the benchmark slipping into the negative at one stage before rebounding as much as 2.7 percent and then losing steam towards the close. The benchmark, which had lost more than half its value in calendar 2009 and was one of the worst performers in the world, fell 26 percent in the 2008/09 financial year. "Today's rise is a pullback after yesterday's big correction. The shares take their cues from international markets and there is a feeling there will not be any more sharp declines in any of them," Suraj Saraogi, managing director at Key Note Capitals, said. The index had dropped 4.8 percent on Monday in its biggest fall in almost three months after rallying more than a fifth over three weeks. Top gainers on Tuesday included outsourcer Infosys Technologies (INFY.BO) and diversified cigarette maker ITC (ITC.BO). But a slowing economy, political uncertainties linked to general elections and quarterly results due by mid-April that are expected to be bleak could keep investors wary in the near term, traders said. "A close scrutiny of ground level facts enforce us to subscribe that a major party or coalition is not ensured of getting a comfortable majority," Dolat Capital analyst Kapil Yadav said in a note to clients. "While the market has its own favourites -- it does not decide the government or its policy -- it can only react." India goes to the polls in April and May, with the ruling Congress party widely expected to get most votes, but not enough to gain a majority in parliament. Policy advisers have said the economy will fare significantly worse in 2009 than in the previous year, and more doses of fiscal and monetary stimulus may be needed to boost demand and lift growth. However, a senior official at the Asian Development Bank said India had little room for more fiscal support measures, but low inflation had created space for further monetary easing. [ID:nDEL131346] Reliance Industries rose 0.5 percent to 1,523.20 rupees, rallying 24 percent during the quarter. No. 2 software-services exporter Infosys climbed 2 percent to 1,324.10 rupees, taking gains in the quarter to 18.5 percent. Top carmaker Maruti Suzuki and utility vehicle producer Mahindra & Mahindra jumped 49 percent and 39 percent, respectively, during the quarter. Leading truck maker Tata Motors (TAMO.BO), which launched its ultra low-cost Nano car last week, saw its market value rise 13 percent this quarter. ICICI Bank (ICBK.BO), HDFC Bank (HDBK.BO) and government-run State Bank of India (SBI.BO) all had a good run in March as credit growth improved and advance-tax figures paid by the firms indicated healthy quarterly earnings. The banking sector .BSEBANK rose 5.9 percent in March, but ended the quarter down 17.7 percent. In the broader section, advancers led losers in the ratio of more than 1.5:1 on moderate volume of 338.2 million shares. The 50-share NSE index closed up 1.4 percent at 3,020.95. Asian shares were mixed on Tuesday, with Japan's Nikkei .N225 down 1.5 percent, while MSCI's measure of other Asian markets .MSCIAPJ rose 1.1 percent. MAIN TOP 3 BY VOLUME * Unitech (UNTE.BO) on 15.6 million shares * GVK Power & Infrastructure (GVKP.BO) on 14 million shares * Reliance Natural Resources (RENR.BO) on 11.4 million shares STOCKS THAT MOVED * Great Offshore Ltd (GOFS.BO) rose 5.6 percent to 250.65 rupees after the company said it entered into a three-year agreement with ONGC (ONGC.BO) at a contract value of $65 million. * Bharat Electronics Ltd (BAJE.BO) rose 2.8 percent to 890 rupees after the company said late on Monday it signed an agreement with Bharat Heavy Electricals (BHEL.BO) to jointly set up a company for solar photo voltaic cell business. FACTORS TO WATCH * For technical analysis double click on www.reutersindia.net * Indian rupee extends gains on stock rise; weak dlr [INR/] * Indian bond yields ease, banks buy ahead of yr-end [IN/] * Yen falls as fiscal yr ends; euro up on equity rally [FRX/] * Oil above $49 on firmer equities, weak dollar [O/R] * World stocks set for best month in over 6 years [MKTS/GLOB] * US stock futures point to higher open; await PMI data [.N] * For closing rates of Indian ADRs

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