Indian shares gain; hopes high for infrastructure sector

* BSE ends 0.33 pct up, NSE also adds 0.33

* Cement shares hit new record highs

* India may amend controversial tax rules

* Indian markets will be shut on Tuesday

(Updates closing prices, adds details, background)

By Manoj Dharra

MUMBAI, Oct 1 (Reuters) - Indian shares rose on Monday totheir highest close since July 2011 as construction and otherinfrastructure-related stocks such as IVRCL rose on expectationsthe government would continue to promote projects in the sector.

Auto makers gained, as well, after postingstudier-than-expected September sales, while software servicesexporters such as Infosys

recovered from recent falls.

Data showing the current account deficit in the April-Junequarter narrowed from a record in the previous quarter alsoboosted sentiment, especially as the report on Friday alsoshowed a steep fall in gold imports.

Investors will now be on the lookout for additional actionfrom the government, after a slew of reforms last month sparkeda rally in stock markets.

India could consider amending controversial rules on taxavoidance for foreign investors in 20 days, the finance ministersaid on Monday, potentially ending months of uncertainty thathad hurt confidence.

"Markets are positively poised in the near-term as sentimentin the market and corporates has suddenly improved. Incrementalgrowth depends a lot on confidence, too," said Sandip Sabharwal,CEO of portfolio management services at Prabhudas Lilladher.

"Events that can create volatility would largely be fromeuro zone."

India's benchmark BSE index

rose 0.33 percent, or61.17 points, to end at 18,823.91, marking its highest closesince July 25, 2011.

The 50-share NSE index

gained 0.27 percent, or 15.50points, to 5,718.80 points, marking its highest close since July7, 2011.

Indian markets will be shut on Tuesday for a public holiday.

Infrastructure-related stocks gained after the financeminister said India will allow insurance companies to invest inprojects, which may help meet big funding requirements in thesector.

The government this year has announced a number of measures,including road projects and cutting taxes on overseas borrowing,that should help the infrastructure sector.

Construction firms rose, with IVRCL

up 4.4 percentand NCC Limitedending up rose 3.5 percent.

Cement makers continue to rally, with some stockshitting record highs, helped as well by expectations forincreased construction activity after the monsoon season endedon Sunday.

Ambuja Cements

gained 3.7 percent, having hit arecord at 211 r upees. Cement makers were expected to announceSeptember shipments later on Monday.

Select auto stocks rose after posting sturdier Septembersales than expected. Maruti Suzuki

rose 0.6 percentafter saying volumes rose 9.8 percent, while TVS Motor

gained 4.9 percent after sales fell less than expected.

Software services exporters recovered from recent falls:Infosys Ltd

gained 3 percent after falling 2.5 percentover the previous four sessionsSteel Authority of India Ltd

rose 0.8 percentafter J.P. Morgan upgraded the stock to 'overweight' from'neutral', citing near-term improvement in the Asian steeloutlook and a decline in coking coal prices, among otherfactors.

However, shares in air conditioner maker Voltas

fell for the third day, ending down 2.3 percent, on continuedconcerns about declining margins.

For additional stocks on the move double click

FACTORS TO WATCH* Euro off 3-week low but Spain worries persist�

* Brent crude slips below $112 as global worries weigh

* European shares jump at start of new quarter

* Foreign institutional investor flows

* For closing rates of Indian ADRs

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(Additional reporting by Abhishek Vishnoi; Editing by)

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Keywords: MARKET INDIA STOCK/URGENT