UPDATE 1-Cairn India shares up on counter-bid hopes, oil find

* Stock rallies over 3 pct; top gainer in BSE-100

* Volume at 1-½ times 90-day average (Adds detail)

MUMBAI Aug 24 (Reuters) - Shares in explorer Cairn India (CAIL.BO), which is a target of a takeover by Vedanta Resources (VED.L), rallied more than 3 percent on Tuesday boosted by expectations for a counter-bid by Indian state firms.

Last week, India focused miner Vedanta said it had agreed to spend up to $9.6 billion to buy a majority stake in Cairn India from its UK-based parent Cairn Energy (CNE.L). [ID:nLDE67F074]

Late on Monday, an oil ministry source said all options were open for Indian state energy firms to make a counter bid. [ID:nSGE67M0KB]

A banking source familiar with the matter told Reuters that Oil and Natural Gas Corp (ONGC.BO), Oil India (OILI.BO) and GAIL (India) (GAIL.BO) -- all state-controlled -- were considering a joint bid for Cairn India.

The companies had not yet mandated any banks for a deal, the source said.

Separately, Cairn India said after hours on Monday it had discovered oil and gas in an onshore block in the Krishna Godavari basin off India's east coast. [ID:nSGE67M0GV]

At 9:58 a.m. (0428 GMT), Cairn India shares were up 2.5 percent at 351.85 rupees, after rising as high as 355, while the main stock index .BSESN dropped 0.1 percent.

Around 0.8 million shares changed hands on the BSE, around 1-½ times the full-day average volume over the past 90 days. The stock was the highest gainer amongst the BSE-100 .BSE100 components. (Reporting by Ami Shah; Editing by Ranjit Gangadharan)