Indian shrs post biggest weekly fall in 11 weeks

* Reliance tumbles 4 pct to lowest close in 7 wks

* Banks rise, after decline in prev sessions

* L&T sheds 2.3 pct as Sept qtr sales lag forecasts
(Updates to close)

By Ami Shah

MUMBAI, Oct 23 (Reuters) - Indian shares posted its biggest
weekly fall in 11 weeks, but early gains on Friday triggered by
strong global cues were checked by a 4 percent fall in energy
giant Reliance Industries (RELI.BO).

Reliance Industries declined as much as 4.5 percent after
partner Hardy Oil and Gas (HAOG.L) said it will stop exploring
a well for gas in the D9 block off India's east coast.

The stock closed 4 percent lower at 2,047.30 rupees, its
lowest close in almost seven weeks.

Hardy Oil said the well, in the Krishna Godavari basin,
encountered poor reservoir sands, and will be plugged and
abandoned. Reliance, which has a 90 percent interest in the
block, declined to comment.

"It is an overreaction," said Amitabh Chakraborty,
president of equities at Religare Capital. "It is very normal
for an exploration & production company to take steps like
these."

"Market is at an edge as valuations are stretched, and
people are just looking at reasons to book gains. Any negative
news is overplayed," he added.

"The impact of this news on Reliance Industries has been
high, considering that it is already bothered by the court
case," said R. K. Gupta, managing director of Taurus Mutual
Fund.

The 30-share BSE Index .BSESN closed 0.13 percent or
21.07 points higher at 16,810.81 with 18 of its components
gaining. It rose to as much as 17,006.77 in early deals.

The index shed nearly 3 percent this week, but is up more
than 74 percent so far in 2009, powered by foreign fund inflows
of over $14 billion.

"We could see Reliance Industries lower on Monday too,
which will hurt the market as well, as it has the highest
weight on Sensex," added Gupta.

Banks bounced back after being battered in recent
sessions, but closed off highs as a finance ministry official
told Reuters the ministry was not pushing to raise the
hold-to-maturity cap for banks. [ID:nBMA006210]

The sector index .BSEBANK closed 1.31 percent higher
after shedding 4.6 percent in four previous sessions.

State Bank of India (SBI.BO) closed 1.2 percent higher at
2,353.85 rupees, while ICICI Bank (ICBK.BO) rose 1.5 percent to
904.20 rupees.

Engineering and construction major Larsen & Toubro
(LART.BO) declined 2.3 percent to 1,571.35 rupees, its lowest
close in seven weeks , as its September quarter sales lagged
forecasts and it said funding delays were still slowing some
projects [ID:nBOM463101]

"Execution and, hence, sales growth in the quarter were
tepid due to a delay in clearances for infrastructure projects,
and lower demand for machinery and industrial products,"
Goldman Sachs said in a note, while maintaining a "neutral"
rating on Larsen & Toubro.

Cigarette maker ITC (ITC.BO) jumped nearly 5 percent t0
259.85 rupees, as it reported a better-than-expected 26.3
percent rise in its September quarter net profit.
[ID:nBMA006207]

The country's third-largest software services exporter
Wipro (WIPR.BO) climbed 2.1 percent to 589 rupees after it said
late on Thursday it won a 10-year technology outsourcing
contract from the airport in national capital New
Delhi.[ID:nBOM196884]

In the broader market, gainers outnumbered losers in the
ratio of 1.1:1, in a relatively lower volume of 371 million
shares.

The 50-share NSE index .NSEI closed 0.17 percent higher
at 4,997.05.

STOCKS THAT MOVED

* Asian Paints (ASPN.BO) rose 9.5 percent to 1,676.15
rupees after the country's largest paint maker said its
July-September net profit more than doubled to 2.7 billion
rupees. [ID:nBOM200196]

* Lender for infrastructure projects Infrastructure
Development Finance Co (IDFC.BO) climbed 2.8 percent to 160.65
rupees, after it said its September quarter net profit rose
19.5 percent. [ID:nBMB008757]

MAIN TOP 3 BY VOLUME

* Unitech (UNTE.BO) on 10.7 million shares

* Ispat Industries ISPT.BO on 9.1 million shares

* NHPC (NHPC.BO) on 6.0 million shares

FACTORS TO WATCH
* For technical analysis double click on www.reutersindia.net
* India rupee report
[INR/]
* India bond report
[IN/]
* Sterling slide lifts dlr, euro as UK GDP shocks mkt
[FRX/]
* Oil eases towards $81 on economy caution
[O/R]
* World stocks end 3-day losing run; sterling hit
[MKTS/GLOB]
* Futures point to Wall Street edging higher
[.N]
* For closing rates of Indian ADRs
INADR
(Editing by Jarshad Kakkrakandy)