Indian shares shrugged off choppy Asian markets and rallied 2.1 percent on Wednesday to their highest close since early January, boosted by short covering ahead of the expiry of monthly derivatives contracts. The rise, for the third straight session, took gains to 20 percent from the 2009 low hit on March 6, helping the market recoup most losses caused by the corporate fraud unveiled by outsourcer Satyam Computer Services (SATY.BO) on Jan. 7. Energy giant Reliance Industries (RELI.BO) and HDFC Bank (HDBK.BO) led the rally, but traders said there was resistance and mobile operator Bharti Airtel (BRTI.BO) and Oil & Natural Gas Corp (ONGC.BO) dropped. The 30-share BSE index .BSESN firmed 2.08 percent, or 196.86 points, to 9,667.90, its best close since Jan. 6, the day before Satyam said it had overstated profits for many years and triggered a market slide. The benchmark had started 0.3 percent lower and seesawed through the day, rising as much as 2.5 percent at one stage. D.D. Sharma, vice president at Anand Rathi Securities, said the rise was underpinned by the derivatives expiry on Thursday. "Short sellers need to cover their positions when the market is moving up with only one day left for the futures settlement," he said. Twenty-two of the index components rose while in the broader market, gainers marginally led losers 1,271 to 1,221 on heavy volume of 346.7 million shares. Traders said potential risks for a sustained upside were the slowing economy and political instability worries. A Reuters poll showed inflation in mid-March was probably near zero, an all-time low since annual records started in 1977/78. [ID:nBOM466238] An alliance led by the ruling Congress Party has lost ground over the last week amid coalition squabbles, but is still likely to win India's April-May general election, a Reuters poll of 14 leading analysts has predicted. [ID:nISL458956] Economic growth is forecast to fall below 6 percent to a seven-year low in 2009/10 after the global crisis hits Asia's third-largest economy harder than expected. Reliance Industries, which has the heaviest weight in the main index, rose 5.6 percent to 1,533.40 rupees, as it gets set to pump gas from its Krishna Godavari basin field off India's east coast. The stock has leaped almost 44 percent since Jan. 13, when it hit the year's low of 1,067.10 rupees. HDFC Bank climbed 3.6 percent to 974.40 rupees. ONGC, which had risen 8.9 percent over the previous five trading sessions, fell 2 percent to 763.70 rupees, and Bharti, which had climbed 5.7 percent over the same period, shed 2.1 percent to 591.05 rupees. Satyam Computer fell 3.1 percent to 40.50 rupees after Spice Group said it may withdraw from the race to buy the struggling outsourcer due to a lack of desired transparency in the bidding process. [ID:nBOM323512] The 50-share NSE index rose 1.6 percent to 2,984.35. Asian shares retreated from two-month highs as investors assessed whether a U.S. plan to deal with banks' toxic debt would revive the financial system and help pull the economy out of recession. MAIN TOP 3 BY VOLUME * Unitech (UNTE.BO) on 36.7 million shares * Crompton Greaves (CROM.BO) on 12.7 million shares * Reliance Natural Resources (RENR.BO) on 11.4 million shares STOCKS THAT MOVED * Tata Power Company Ltd (TTPW.BO) rose 7.1 percent to 740.20 rupees after the utility said it received 3.17 billion rupees from a stake sale in Tata Teleservices. * Novartis India Ltd (NOIN.BO) rose 20 percent to 330.70 rupees after parent Swiss drug maker, Novartis (NOVN.VX), made an open offer to acquire an additional 39 percent in its Indian unit at 351 rupees per share. FACTORS TO WATCH * For technical analysis double click on www.reutersindia.net * Indian rupee off 1-wk lows tracking share gains [INR/] * Indian bond yields rise before borrowing plan [IN/] * Yen recovers, dollar edges up; German Ifo awaited [FRX/] * Oil falls towards $53 on weak demand, equity losses [O/R] * Stocks inch higher; euro falls after Ifo [MKTS/GLOB] * U.S. stock futures point to higher open on Wall St [.N] * For closing rates of Indian ADRs

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