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BENGALURU  - Indian shares reversed course to drop more than 1% in Thursday afternoon trading, as U.S. bond yields surged following the Federal Reserve's decision to maintain its dovish stance, sparking a sell-off in domestic equities.

The NSE Nifty 50 index fell 1.01% to 14,572.40 by 0829 GMT, while the S&P BSE Sensex slipped 1.07% to 49,257.85.

"U.S. 10-year yields are now up to 1.72%, its highest since January last year and it is tough to ignore sentiment from the bond market which is spilling over to equity markets," said Amit Kumar Gupta, portfolio manager, Adroit Financial Services Pvt. Ltd.

Both indexes had advanced roughly 1% each earlier in the session after the U.S. Federal Reserve pledged to keep its benchmark overnight interest rate near zero, boosting global risk appetite.

Indian benchmark indexes have fallen every day so far this week and they closed 1% lower on Wednesday, as a fresh surge in domestic COVID-19 cases and rising U.S. bond yields hurt risk appetite.

The country reported its highest rise in daily COVID-19 cases in more than three months on Thursday.

Selling was broad-based on Thursday afternoon with IT stocks falling 2.44%

Software services provider Infosys Ltd fell 3.3% and was the top drag to the Nifty 50.

Private-sector lender ICICI Bank Ltd which was among the top boosts to the Nifty 50 earlier in the session, gave up gains to fall 1.4%.

State-run banks, which rose 1.92% earlier in the day, were down 1.95% in afternoon trade.

Meanwhile, equities in Asia held on to gains after the U.S. central bank's views but U.S. futures slipped due to rising bond yields.