Indian shares slip; Tata Motors drops after loss

* Market turns negative in choppy early trade

* Tata Motors drops 4.5 pct after annual loss

* DLF, Unitech gain on reports of easing cash flows

(Updates to mid-morning)

MUMBAI, June 29 (Reuters) - Indian shares slipped in choppy trade on Monday as some investors booked profits after strong gains on Friday and as weakness in regional markets offset positive expectations ahead of the federal budget next week.

Shares of top vehicle maker Tata Motors (TAMO.BO) tumbled more than 4 percent after it reported its first annual loss in eight years late on Friday [ID:nBOM433658], while Sun Pharmaceuticals (SUN.BO) fell on media reports the company had withdrawn its 2009/10 sales guidance.

By 11 a.m. (0530 GMT), the 30-share BSE index .BSESN was down 0.39 percent at 14,706.48 points, with 16 stocks declining. It had opened higher, but slipped soon after.

"There is profit taking today, the market's taking a breather. But the long positions are there, the bias will remain upward," said Gajendra Nagpal, chief executive at Unicon Financial Intermediaries.

Tata Motors, the country's largest vehicles maker, slipped 4.5 percent to 324.95 rupees. Sun fell 3.3 percent to 1,103 rupees, its second straight fall after U.S. authorities last week seized drugs made by its U.S. unit, Caraco Pharmaceutical (CPD.A), for violating manufacturing standards.

Among gainers, state-run explorer Oil and Natural Gas Corp (ONGC.BO) was up 2.2 percent at 1,064 rupees on hopes the government would ease the subsidy burden on state-run oil companies which have to sell products at discounted prices.

Top developer DLF (DLF.BO) and smaller rival Unitech (UNTE.BO) were among the key gainers after newspaper reports that the latter attracted strong interest for a $275 million share sale to institutions and that both companies were restarting several incomplete projects on easing cashflows.

DLF rose 4.1 percent to 338.70 rupees, while Unitech was up 3.4 percent at 85.15 rupees.

Investors expect the market undertone to remain positive ahead of the federal budget next week which could see the government unveil pro-market reforms such as privatisations and relaxation of foreign investment rules.

"This is the final week before the Budget, and people would like to play on long (positions) on concrete expectations from the Budget," said S.P. Tulsian, an independent investment analyst.

In the broader market, gainers led losers by almost 2 to 1 on moderate volume of 109 million shares.

The 50-share NSE index was down 0.26 percent at 4,363.95 points.