Indian shares snap 4-day rally; Reliance gains

* Main index drops 0.35 pct after rising 7.1 pct over 4
days

* Telecom stocks fall as bleak outlook weighs

* Reliance Ind climbs 1.4 pct on oil discovery

* State Bank, ICICI Bank gain on recovery hopes
(Updates to close)

By Ami Shah

MUMBAI, Nov 10 (Reuters) - Indian shares snapped a four-day
winning streak and fell 0.35 percent on Tuesday, weighed down
by telecom stocks that dropped on a bleak out for the sector
due to growing competition and a price war.

The market had initially rallied more than 1 percent,
adding to gains of 7.1 percent in the past four days, but met
with resistance on concerns the rise was too fast against
uncertainties about outlook.

Reliance Industries (RELI.BO) rallied as much as 3.7
percent after the energy major announced its first oil find in
a western Indian block, boosting hopes the firm's oil and gas
exploration business will help offset some of the weakness in
the refining sector. [ID:nBOM386903]

The stock, with the most weight in the main index, ended up
1.4 percent at 2,052.60.

Bharti Airtel (BRTI.BO), the country's leading mobile
operator, fell 4.5 percent to 293.75 rupees, while rival
Reliance Communications (RLCM.BO) shed 2.9 percent to 169.05
rupees.

JPMorgan cut its earnings estimates and share price targets
for the sector companies and said it did not see a bottom yet.

"We believe that the fundamental issue for the sector
remains overcompetition and high capital expenditure over last
2-3 years leading to empty network for several players," it
said in a note.

The 30-share BSE index .BSESN closed down 58.16 points at
16,440.56 after rising as high as 16,677.53 in the morning.
Twenty-two of its components declined.

"There was resistance as the market headed higher," said
R.K. Gupta, managing director of Taurus Mutual Fund.

The 50-share NSE index closed 0.2 percent lower at
4,881.70.

Gupta said he expected the Nifty to trade in a range of
4,550-4,950 over the next 3-4 months.

Leading lenders such as State Bank of India (SBI.BO) and
ICICI Bank (ICBK.BO) firmed on positive long-term outlook
expectations, analysts said.

"I would still recommend a buy on banks. If the economy has
to grow, banking is going to play a very vital role there,"
said Gajendra Nagpal, CEO of Unicon Financial.

State Bank firmed 2.1 percent to 2,368.10 rupees and ICICI
climbed 0.7 percent to 894.65 rupees.

India will focus on driving domestic demand until key
developed markets recover and will not exit fiscal stimulus
measures until necessary, Finance Minister Pranab Mukherjee
said on Tuesday. [ID:nDEL484907]

In the broader market, losers outpaced gainers in the ratio
of 1.1:1 on relatively better volume of 403 million shares.

STOCKS THAT MOVED

* State-run explorer Oil & Natural Gas Corp (ONGC.BO) fell
2.5 percent to 1,137.85 rupees on profit taking after it rose
4.3 percent in four previous sessions.

* Alstom Projects India (ABBP.BO) rose 1.5 percent to
529.45 rupees after the power generation services provider said
it won contracts worth 3.65 billion rupees from Hindalco
Industries (HALC.BO) for supply and installation of four gas
treatment plants. [ID:nBMB009046]

* Unichem Laboratories (UNLB.BO) closed nearly 3 percent up
at 260.10 rupees after the drugmaker said it had received
approval from the U.S. Food and Drug Administration for its
bulk drug facilities in Madhya Pradesh and Maharashtra.
[ID:nBOM278421]

The stock rose as much as 10.8 percent in early deals.

MAIN TOP 3 BY VOLUME

* GVK Power (GVKP.BO) on 16.3 million shares

* Suzlon Energy (SUZL.BO) on 13.7 million shares

* Unitech (UNTE.BO) on 12 million shares

FACTORS TO WATCH
* For technical analysis double click on www.reutersindia.net
* India rupee report
[INR/]
* India bond report
[IN/]
* Dollar edges off 15-mth lows; stg falls on Fitch
[FRX/]
* Oil drops to $79 as hurricane weakens
[O/R]
* Stocks rise as risk favoured; sterling down
[MKTS/GLOB]
* Futures point to lower open on Wall Street
[.N]
* For closing rates of Indian ADRs
INADR
(Reporting by Ami Shah; Editing by Ranjit Gangadharan)