The big story in this city's newspaper industry is that the Sun is rising, literally.

Cynics about Baltimore long have expressed dismay over the local population's preference for newspapers. Offered every morning one of the best daily products produced in the journalism business. The Sun, most citizens here over the years picked instead one of the afternoon papers - the Evening Sun (put out by the same firm that publishes the morning paper but one of the country's great newspapers) or the Hearst Corp's News American.

In the six months ended last Sept. 30, however, the morning Sun finally eked out a small lead in circulations, topping each of its afternoon rivals (although combined circulation of the evening papers remained abut twice the morning Sun's circulation).

However, the circulation figures here over recent decades do not show that the morning paper suddenly is becoming a more popular product. In fact, circulation is below peak levels for the Sun. It's just that readership of the afternoon competitors has been plunging downward so rapidly that the morning publication's sold based on generally more affluent and influential readers now equals in numbers the circulation of each afternoon daily.

The morning Sun had acquired the Baltimore World in 1910 and renamed it the Evening Sun. Although management of the Sun papers in unified - one accounting one sales, one circulation staff and a single production factory - the editorial products are produced by separate stafts. The morning paper always has been the "quality" product even though it was started by printer Arunah S. Abell as a penny paper on May 17, 1837, when the press in America first started to appeal to a mass audience.

The most recent circulation figures, for the six months ended March 31, showed the Evening Sun back on top of the morning paper by a small margin. But a long-term trend toward declining afternoon circulation here and in other major American cities has not stopped and the morning paper in expected to regain the circulation leadership again and to begin a gradual widening of its dominance here, which should increase its base of advertising revenues.

Moreover, the privatley-owned A. S. Abell Co., publisher of both Sunpapers, has made a major investment in new technology and is seeking a role in the information dissemination business of the future - including Buck Rogers-style computer printouts or television screen displays in the homes of future decades.

All the while, owners of the firm have demonstrated a fierce loyalty to the idea of maintaining the Sun-papers as an independent newspaper publishing company. Overtures for a takeover from the Newhouse newspaper chain were rejected and the Abell Co. has sought to retain the distinctive flavor of its foreign correspondence for the morning Sun alone by turning down bids to syndicate its overseas reports and even by making certain that the Evening Sun carries no reports from the Sun's big foreign staff.

Says Sunpapers general manager Donald H. Patterson, also the senior vice president of the Abell Co. The news staffs of the morning and evening newspapers "compete with one another and they occasionally speak to one another." Overall, Abell employs about 2,000 persons and has annual revenues estimated at $50 million: broadcast subsidiaries are WMAR TV-FM here and WBC TV-AM-FM, in Salisbury, which have separate printing businesses.

The goal of company owners, Patterson said, "tradionally has been to try and produce the best news product possible and to sell ads on the basis" of supporting a newsgathering budget, rather than being "directed toward money-producing efforts."

Profitable broadcast operations have helped the owners meet that goal and the morning Sun has more reporters based away from Baltimore than any other American paper its size - 17 full time correspondents abroad, 21 in Washington and several more in other parts of the country. Outside of The New York Times, Wall Street Journal, Los Angeles Times and Washington Post, no other newspaper in this country lavishes such a distinctive editorial report on its readers.

At the same time, few U.S. citizens outside of Baltimore. Washington and journalism schools are aware of the Sun's daily report. The Journal is distributed nationally while reporting in the New York Times. L. A. Times and Washington Post gets worldwide circulation through news syndicates.

The Sun was a pioneer in Washington reporting, placing correspondents in the capital during its first year of business.Today, the Washington bureau's reports on government agencies, energy and the economy are among the best in the industry. In terms of local new, the Sun in considered Maryland's newspaper of record.

Obviously, Sunpapers management only eats into its potential profitability by providing ia full report by its own staff around the world. But James Reston, the columnist for The New York Times, said he thinks that "as a fundamental responsibility," every newspaper over 100,000 in circulation should have reporters in Washington and "at least one brilliant correspondent touring Asia, one in Africa, one in Europe, one in Latin America . . . and charge it against the badget of the paper."

Braced with its news report and declining afternoon readership, the future of the Sun would appear to be good. Circulation for the six months ended last Sept. 30 was 176,309 daily and 350,372 on Sundays, compared with 175,003 for the Evening Sun and 175,933 for the News American, which has a Sunday circulation of 255,645. Most circulation for the papers is in metropolitan Baltimore but the morning paper is distributed and sidely read throughout the state.

A year earlier, the News American was No. 1 on weekdays at 195,672, the Evening Sun had 181,837 and the morning Sun was 178,205. The Sunday Sun's lead over the News American was smaller at 340,098 vs. 268,683.

Overall, what these figures show is a decline in newspaper circulation here, a problem publishers are facing in many cities. And, the decline is greatest for afternoon papers.

Bark in the mid-1950s, for example, circulation of the News-Post (now News American) was 232,000 a day and the Evening Sun was 214,000 compared with morning Sun circulation of 193,000.

Thus in two decades, overall circulation of the three dailies has dropped from 639,000 to 527,000, a plunge of some 18 per cent. While the city of Baltimore's population also declined over those years from 950.000 to 840,000, a boom in the suburbs has increased overall metropolitan population from about 1.4 million to 1.8 million.

As Patterson of the Sunpapers sees it, the decline in readership represents a combination of many factors, mostly affecting afternoon readership, more households with husbands and wives working, a lack of time to read, the desire to watch television at night.

While he said newspapers such as both Sunpapers will survive, he forecast "some drastic jolts" for the industry from developing information-gathering systems, which will provide business people at work with instant data and people at home with some variety of information services in future decades.

But because newspapers produce the "basic ingredients and can collect the data," they will be a part of the communications industry, he declared. The Abell Co. expects to be providing the information when, "somewhere down the line, a function of the household" may be a television set that provides a printed sheet for reading, a process now in use in Japan.