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* BSE gains 0.11 pct, NSE rises 0.08 pct
* FII buying spree continues even as markets consolidate
* Power sector lenders PFC, REC decline
By Abhishek Vishnoi
MUMBAI, Sept 25 (Reuters) - Indian shares edged higher on Tuesday led by gains in defensive and low-beta stocks such as ITC on value buying after recent declines on churning in favour of cyclicals and high-beta stocks on bets of additional government reforms.
A slew of reforms announced this month generated significant interest in India stocks with the benchmark index gaining 7.25 percent and foreign investors pumping in close to 132.2 billion rupees in September so far.
Although analysts expect some consolidation after the trend changing gains this month and as markets head closer to expiry of September derivatives contracts on Thursday, it is seen more as an opportunity to increase exposure in Indian stocks.
"It is definitely consolidation, as markets have lost momentum because of expiry," Hitash Dang, vice-president at Jaypee Capital.
"Government measures have been extremely good, we expect the upward momentum to continue post-expiry," he added.
India's benchmark BSE index rose 0.11 percent, consolidating for the second day after a fast run-up in September on a heavy dose of reform announcements.
The 50-share NSE index rose 0.08 percent, although finding resistance at the 5,700 level for a third consecutive session.
Deutsche Bank in a report said continuing rupee gains and subdued oil prices will give a 'rare sweet spot' for India, po sitively impacting the fiscal deficit, and give support to the the central bank, which has been waiting for inflation to cool.
India's ruling Congress party meets later in the day to decide on changes in the Cabinet, which are expected to last until the next general elections in 2014. Traders would be watching the outcome of the meeting to finetune political expectations.
Among defensive stocks, cigarette maker ITC rose 1.9 percent, while Hindustan Unilever rose 2 percent.
Among other low-beta stocks, Cipla gained 2.1 percent on value buying after an 8.7 percent decline in the last eight sessions.
Shares in UB group rallied after Diageo Plc said it is in talks to buy a stake in Indian billionaire Vijay Mallya's United Spirits Ltd, reviving an on-again, off-again courtship that would ramp up its presence in the world's largest whisky market.
United Breweries Ltd gained 5.9 percent, United Spirits gained 8.9 percent, Kingfisher Airlines Ltd rose 7.9 percent, while United Breweries Holdings rallied 17.6 percent.
Barclays in a note said restructuring measures for state electricity boards "fall short of expectations", and will serve as a bailout arrangement, rather than representing tangible reform measures.
BHEL shares ended 2.4 percent higher, while BGR Energy and Thermax shares fell 0.5 and 0.43 percent respectively.
Among other decliners, shares exposed to India's state-owned electricity distributors fell as traders chose to "sell on news" of government bailout plan for the cash-strapped utilities saddled with more than $35 billion in debt.
Power sector lender Power Finance Corp fell 1.1 percent, w hile Rural Electrification Corp fell 2.8 percent.
Shares in Cairn India fell 3.4 percent after Cairn Energy was set to sell an 8 percent stake in its former unit for up to $940 million, in the second such deal in three months.
Shares in Axis Bank fell 2.71 percent on concerns over credit provided to Indonesia's PT Bumi Resources, whose parent company Bumi Plc launched an investigation into alleged financial irregularities at its Indonesian operations.
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