MUMBAI (Bloomberg) — Shares of Reliance Capital Ltd. and Aditya Birla Nuvo Ltd. gained on speculation Prime Minister Manmohan Singh's government would ease restrictions for overseas investment in the insurance industry.

"Among major financial-sector reforms, a raising of the foreign holding limit in the insurance sector from 26 percent to 49 percent has been long anticipated, and should happen soon," brokerage Auerbach Grayson said in a note to clients yesterday.

The Congress party won the most seats since 1991 in general elections ended last week, enabling Singh to form a new government without support from communist lawmakers. With almost twice as many seats as the main opposition, Singh may further reduce barriers to foreign investment in insurers and retailers, plans that had previously been blocked by the communists.

Reliance Capital jumped 22 percent to 911.85 rupees in Mumbai trading, extending yesterday's 26 percent rally. Aditya Birla Nuvo gained 9.6 percent to 715.60 rupees. Max India Ltd. added 7.3 percent to 176 rupees.

Aditya Birla Nuvo is part-owner of Birla Sun Life Insurance Co., while Reliance Capital and Max India each own insurance businesses.