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Indian blue-chip shares reversed earlier gains to finish lower on Thursday, dragged by financials and autos, in contrast to the rally in its Asian peers on hopes that the Federal Reserve would stop raising interest rates.

The Nifty 50 index closed 0.60% down at 19,659.90, while the S&P BSE Sensex lost 0.66% to 66,266.82.

The indexes had mirrored the rise in their Asian peers earlier in the session after the Fed delivered what some expect to be its last rate hike this year.

However, while the more internationally exposed Indian blue-chip shares gave up those gains the domestically focused mid-caps finished 0.27% higher, while the small-caps ended flat.

"There is a bifurcation in markets. On the one hand, domestic-linked stocks are doing well while export-linked sectors have come under pressure," said Amit Kumar Gupta, founder of Fintrekk Capital.

He said export-linked sectors were affected by the weakness in Europe and U.S., while domestic-linked sectors were benefiting from strong inflows and reasonably good earnings.

Reliance-spinoff Jio Financial's plan to start asset management services in India in partnership with BlackRock sent shares of AMCs sliding. HDFC AMC, UTI AMC, Aditya Birla Sun Life AMC lost 0.5%-2% and dragged the heavyweight financial index down 0.78%.

Mahindra & Mahindra slid 6.31%, the most on the Nifty, as the automaker's plan to buy a stake in private lender RBL raised concerns over its capital allocation and focus on non-core business. The auto index dropped 1.21%.

Tech Mahindra tumbled 3.79% after its quarterly profit dropped as clients cut back on IT services spending.

On the flip side, the pharma index jumped 3.05%, boosted by gains in Dr Reddy's Laboratories and Cipla as the drugmakers beat quarter profit expectations.

Cipla rose 9.64% to a nine-month high, while Dr Reddy's climbed 0.57%.