* Investors discount reform intentions in economic survey * Want to see policy push in budget on Monday * Oil firms rally after fuel price increase * Reliance Industries, auto makers drop (Updates to close) By Prashant Mehra MUMBAI, July 2 (Reuters) - Indian shares eked out modest gains in volatile trade on Thursday as investors discounted the government's reform intentions in an annual survey and waited for specific announcements in the budget early next week. The country could see growth of around 7 percent this year and more in coming years if it makes sweeping reforms including removal of fuel subsidies, and speeds infrastructure development, the survey said. [ID:nISL519488] "This is only a statement of intent. Honestly, we will have to wait for the actual budget for direction," said Deven Choksey, managing director at K.R. Choksey Shares & Securities. The budget will be presented to parliament on Monday. State-run oil firms led by Oil and Natural Gas Corp (ONGC.BO) were key gainers after India unexpectedly raised gasoline and diesel prices, while Reliance Industries (RELI.BO) fell on uncertainty about a gas supply deal with a former group firm. The 30-share BSE index .BSESN rose 0.09 percent, or 13.02 points, to 14,658.49 points, with 17 components in the red. The index rose nearly 0.8 percent at one point, but profit-taking then pushed it down more than 1 percent in the afternoon. "The conviction is missing in the market, and profits are being booked at higher levels. A big problem is that index heavyweights such as Reliance, Bharti (BRTI.BO) and Larsen & Toubro (LART.BO) are not participating," Choksey said. The benchmark index has risen 52 percent this year, largely on high expectations for reforms to further open up the economy after the coalition government won a second five-year term in May with more seats in parliament. Investors expect the government to unveil pro-reform measures in the budget such as 3G wireless spectrum auction and stake sales in state firms to raise cash. [ID:nDEL496126] Oil firms rallied on expectation of easing subsidy burden incurred from selling products at discounted rates. On Wednesday, the government raised petrol and diesel prices by as much as 10 percent, the first increase this year. [ID:nBOM500678] ONGC rose 7 percent to 1,126.45 rupees and gas transporter GAIL (GAIL.BO) added 7.9 percent to 310.45 rupees. Oil marketing firms Indian Oil Corp (IOC.BO) rose 1.5 percent to 549.35 and Hindustan Petroleum Corp (HPCL.BO) gained 2.7 percent to 319.75 rupees. Tata Steel (TISC.BO) rose 6.4 percent to 420.15 rupees, its highest close in more than two weeks, on the company's plans to sell global depositary receipts worth about $600 million. [ID:nBOM342851] Top aluminium producer Hindalco (HALC.BO) gained 1.4 percent to 84.55 rupees after lenders agreed to relax terms of a $982 million bank loan [ID:nBMB005747]. The stock had fallen 3.5 percent on Wednesday after it reported profits fell sharply in 2008/09. Uncertainty over a gas supply deal pulled down Reliance Industries, which has the maximum weightage in the BSE index. The stock fell 2.3 percent to 2,010.15 rupees after it said it would appeal to the Supreme Court against a ruling to enter into an unfavourable gas supply deal with former group firm Reliance Natural Resources Ltd (RENR.BO). Shares of auto firms fell on worries higher fuel prices may hit demand for vehicles. Top car maker Maruti Suzuki (MRTI.BO) shed 1.5 percent to 1,053.80 rupees, largest vehicles maker Tata Motors (TAMO.BO) slipped 1.7 percent to 294.30 rupees, while motorcycle maker Hero Honda (HROH.BO) fell 1 percent to 1,384.55 rupees. In the broader market, advances outpaced declines in the ratio of 1.3:1 on above-average volume of 373.2 million shares. The 50-share NSE Index closed up 0.2 percent at 4,348.85 points. TOP 3 STOCKS BY VOLUME * Ispat Industries (ISPT.BO) on 14.8 million shares * Satyam Computer (SATY.BO) on 14.7 million shares * Suzlon Energy (SUZL.BO) on 12.5 million shares STOCKS THAT MOVED * McNally Bharat Engineering Co (MCNL.BO) rose 5 percent to 131.60 rupees after the company said it received orders worth 468.8 million rupees. * Engineering and construction firm Punj Lloyd (PUJL.BO) rose 1.4 percent to 216.95 rupees after it bagged orders worth $392 million from Libya. FACTORS TO WATCH * For technical analysis, double click on www.reutersindia.net * Indian rupee eases further on seesawing shares, dlr [INR/] * India bond yields down on lower supply hopes [IN/] * Dollar up on profit taking before ECB, US payrolls [FRX/] * Oil falls towards $68, gasoline stocks rise [O/R] * World stocks slip before U.S. jobs report [MKTS/GLOB] * US stock futures signal falls ahead of jobs data [.N] * For closing rates of Indian ADRs INADR

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