Indian shares down 0.4 pct; banks down, Reliance gains

* Banks down on concerns profit could be hit after cbank move

* Reliance Industries up after govt allocates more D6 gas

MUMBAI, Oct 28 - Indian shares were down 0.4 percent Wednesday morning, with banks sliding the most, after central bank raised the provision ratio for bad debts in its credit policy review.

Leading lenders State Bank of India <SBI.BO> and ICICI Bank <ICBK.BO> continued falling, on concerns their profit would be hit after the Reserve Bank of India on Tuesday asked banks to increase the minimum provision ratio for bad debts to 70 percent by September 2010. [ID:nBOM40068]

"While the market may not have seen it, the RBI appears to be unwinding its accommodative stance through the banks first, and monetary policy will probably follow," Citigroup said in a note.

"While this is fairly logical, it will likely hurt the banks in the near-to medium-term, especially as the market appears not to have seen it coming," Citigroup added.

Analysts expect leading lenders State Bank of India and ICICI Bank to be among the worst affected.

State Bank shed nearly 3 percent to 2,138.55 rupees while ICICI Bank was down 4 percent at 803 rupees.

"I do believe that some kind of upswing can come in , now that we have been battered a lot," said Gajendra Nagpal, CEO of Unicon Financial.

"After the sell-off we saw yesterday, I don't think we can fall more for now," added Nagpal.

Energy giant Reliance Industries <RELI.BO> rose 2.1 percent to 2,032 rupees, after government allocated an additional 50 million cubic metres a day (mmscmd) of gas from the company's east coast block D6. [ID:nDEL507968]

Software services firms were trading higher after Wipro's <WIPR.BO> robust outlook fuelled optimism a recovery is well underway as overseas clients boost orders. [ID:nBOM412587]

Sector leader Tata Consultancy <TCS.BO> was up 0.8 percent at 646.25 rupees.

Infosys <INFY.BO> climbed 0.3 percent, while Wipro gained 2.4 percent.

The world's eighth-largest steel maker Tata Steel <TISC.BO> was down 3.3 percent at 484.80 rupees, after it posted a bigger-than-expected fall in its quarterly net profit. [ID:nBOM516772]

In the broader market, losers were nearly double the number of gainers in a volume of 131 million shares.

The 50-share NSE index <.NSEI> was down 0.4 percent at 4,827.40

STOCKS ON THE MOVE

* Lanco Infratech <LAIN.BO> rose 3.8 percent to 502 rupees after the infrastructure company approved a 10-for-1 stock split, and said its September quarter net profit more-than-tripled. [ID:nBOM522603]

* Jet Airways <JET.BO>, India's No.2 airline by market share, rose 3.2 percent to 377.60 rupees as it said it is confident of demand and yields per seat rising in the next six months, even as it reported a wider quarterly loss [ID:nBOM502390]

MAIN TOP 3 BY VOLUME

* Thinksoft <THIN.BO> on 7.2 million shares

* Unitech <UNTE.BO> on 6.7 million shares

* Ispat Industries <ISPT.BO> on 5.7 million shares

FACTORS TO WATCH * For technical analysis double click on www.reutersindia.net * India rupee report [INR/] * India bond report [IN/] * Dollar steady, yen gains as risk positions trimmed [FRX/] * Oil steady near $79.50 on API drawdown [O/R] * Asia shares dip, Aussie dlr retreats [MKTS/GLOB] * Profit-taking, data weigh on market; Visa up late [.N] * For closing rates of Indian ADRs <INADR>