(Updates at 10:34 a.m. IST)

By Sethuraman N R

BENGALURU, May 31 (Reuters) - Indian shares pared early

gains on Friday to trade slightly higher, with caution setting

in ahead of the outcome of the national elections next week.

The NSE Nifty 50 was up 0.2% at 22,528 points, while

the S&P BSE Sensex gained 0.2% to 74,059 points, as of

10:34 a.m. IST. The benchmarks rose as much as 0.7% in early

trade.

India's weeks-long election will conclude on June 1, with

the votes being counted on June 4. Investors are awaiting the

exit polls, which project results after voting ends.

Also in focus will be India's fourth-domestic quarter GDP

data due later in the day, which is expected to show the economy

grew at a slower pace than the previous three months.

"The market is tantalisingly poised with the possibility of

a sharp move based on the exit poll results on Saturday

evening," said V K Vijayakumar, Chief Investment Strategist,

Geojit Financial Services.

The benchmarks saw five straight sessions of losses,

ending down nearly 1% on Thursday, as investors trimmed their

positions ahead of the election outcome next week in the

backdrop of the monthly derivatives' expiry.

Expiry of the May derivatives showed that foreign

investors adopted a cautious approach by adding long positions

in single stock futures, hedged with additional index shorts,

said Abhilash Pagaria, Head, Nuvama Alternative and Quantitative

research.

In contrast, high net-worth investors and retail

investors, significantly increased their long positions in both

index and single stock futures, he added.

The more domestically focussed small-cap

and mid-caps extended declines from the previous

session and were down 0.2%, each. They fell over 1% on Thursday.

Shares of India Nippon Electricals surged 12%

and Bharat Rasayan jumped 14% on strong quarterly

earnings.

Meanwhile, the adjustment in the MSCI's Global Standard

index, which tracks emerging market stocks, is due later in the

day, expected to bring in foreign inflows of $2.5 billion.