The BSE Sensex rose 1.7 percent on Tuesday as bargain hunting emerged after falling in the past two weeks, but trading was choppy and analysts were wary about sustaining the gains on doubts about the government's ability to push reforms.

The Congress party, which heads the federal coalition in New Delhi, was trailing in fourth place as counting of votes got underway in the politically important state of Uttar Pradesh.

A setback for the Congress party in UP would make it harder for New Delhi to pursue policies needed to shore up economic growth. The Congress was also behind in Punjab.

The market will be volatile until a clear picture of the election result emerges. There will be some speculative trading ahead of that, said Jagannadham Thunuguntla, head of research at SMC Global Securities in New Delhi.

A poor performance by Congress in the elections will make policy making tougher for the government and it will also lead to announcement of some populist measures in the budget, which would be a bad news for the market, Thunuguntla said.

Maruti Suzuki (MRTI.NS) was up nearly 2 percent after Credit Suisse upgraded the top automaker to outperform from underperform, citing expectations for higher sales and margins for the fiscal year starting on April 1.

The main 30-share BSE index was up 1.67 percent at 17,652.57 by 11:04 a.m. (0534 GMT), with all but one of its components rising. It fell as much as 1 percent in early trade to its lowest level in more than a month.

The benchmark is down nearly 6 percent since February 21, when it climbed to its highest close in nearly seven months. Still, the index is up 13 percent so far this year, helped by strong foreign fund inflows.

Infosys Technologies (INFY.NS) rose 1.6 percent to 2,855.30 rupees, helped by encouraging U.S. economic data, with services sector in the world's largest economy growing at its fastest pace in a year in February.

India's No. 2 software services company gets more than half its revenue from the United States.

State Bank of India (SBI.NS), the country's top lender, was up 2 percent at 2,219.30 rupees and rival ICICI Bank (ICBK.NS) rose 0.6 percent to 875.90 rupees on hopes for an interest rate cut by the central bank later this month.

The Reserve Bank of India is scheduled to review monetary policy on March 15.

Reliance Industries (RELI.NS), which has the heaviest weighting in the BSE index, fell 0.6 percent to 792.60 rupees. The stock rose more than 18 percent in the first two months of this year in a liquidity driven broader market rally.

The 50-share NSE index was up 1.6 percent at 5,365.50 points. In the broader market, there were more than 2 gainers for every loser on volume of more than 225 million shares.

STOCKS ON THE MOVE

* Tata Communications (TATA.NS) rose as much as 1.3 percent to 238.40 rupees. Sources told Reuters the company is seeking $2 billion in loans to finance a potential bid for London-listed Cable & Wireless Worldwide.

* Subex Ltd (SUBX.NS) was up 6.4 percent at 31.60 rupees, after the technology services provider to telecom companies said it has won a multi-million dollar fraud management and revenue assurance contract from a middle eastern mobile operator.

MAIN TOP 3 BY VOLUME

* Lanco Infra (LAIN.NS) on 18 million shares

* Jaiprakash Associates (JAIA.NS) on 15 million shares

* Reliance Power (RPOL.NS) on 11 million shares