MUMBAI (Dow Jones)--Indian shares closed lower Friday as investors used gains in the past five sessions to take profit, and analysts warned the stock market could fall further next week.

The Bombay Stock Exchange's Sensitive Index fell 295.30 points, or 1.6%, to close at 18,211.52, after moving between 18,159.82 and 18,690.97. The benchmark had gained 6.0% in the previous five sessions and ended the week 2.7% higher.

On the National Stock Exchange, the 50-stock S&P CNX Nifty fell 87.50 points, or 1.6%, to end at 5,458.95.

Trading volume on the BSE rose to INR37.12 billion from Thursday's INR33.03 billion. Gainers lagged decliners 773 to 2,085, while 122 stocks were unchanged.

"The recent rally was very impressive but today's falls were sharper than expected," said Jagdish Malkani, country head at TAIB Capital. "There are two contrary forces at play now--positive expectations from the budget and concerns over the deepening spectrum probe."

India's Central Bureau of Investigation is probing the government's 2008 sale of telecom licenses and bandwidth at prices critics say were far below market value. The federal agency says the license sale could have cost the government more than $4.88 billion in potential revenue.

Also, investor expectations from the federal budget, due Feb. 28, have risen after Prime Minister Manmohan Singh said Wednesday the government will set out a roadmap in the budget to attract long-term foreign capital.

Malkani expects the markets to open lower next week.

Of the 30 Sensex constituents, 25 finished lower Friday.

Tata Motors slipped 3.9% to INR1,201.95 on profit-taking after adding more than 9% over the past one week because of robust October-December earnings.

"Tata Motors' third-quarter performance was the best among auto stocks," said an analyst with a local brokerage who declined to be identified. "Also, global sales numbers for January, released earlier this week, showed that the company is consistently clocking a monthly sales rate of over 20,000 for its Jaguar and Land Rover vehicles."

Banking shares were dragged lower by ICICI Bank, which has the third-highest weight in the Sensex. The stock closed 3.1% lower at INR1,025.65 while State Bank of India fell 0.9% to INR2,755.30.

Telecom stocks also declined on profit-taking despite reporting strong mobile subscriber additions in January. Bharti Airtel, the top mobile-phone operator by users, fell 1.9% to INR332.15.

Shares of Anil Ambani-run Reliance companies dropped sharply as investors were wary of holding the group's stocks on concerns about adverse developments in the telecom license probe.

Ambani's Reliance Communications is one of the companies named by a federal auditor as having allegedly benefited from improper spectrum allocation in 2008. The company has denied the allegations.

The telecom operator slumped 6.8% to INR93.15 while Reliance Infrastructure closed 5.6% lower at INR605.60. Reliance Power, which isn't part of the Sensex, shed 5.8% to INR113.80.

Among other Sensex losers, Jaiprakash Associates finished 5.5% lower at INR85.25. Reliance Industries, which isn't part of the Anil Ambani group, fell 1.7% to INR937.35.

Sensex gainers were led by consumer goods maker Hindustan Unilever because of the company's strong volume growth prospects. The stock rose 2.0% to INR279.25.

- By Sudeep Jain, Dow Jones Newswires; 91 22 6145 6123; sudeep.jain@dowjones.com