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BENGALURU - Indian shares slipped into a sell-off on Thursday, closing more than 1% lower for a second straight session, on fears of foreign institutional investors shunning emerging markets following the U.S. Federal Reserve's dovish stance.

"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.

The NSE Nifty 50 index shed 1.11% to end at 14,557.85, while the S&P BSE Sensex slipped 1.17% to close at 49,216.52.

Both the indexes had advanced roughly 1% each earlier in the session amid broad-based gains, as global sentiment was boosted after the U.S. central bank pledged to keep its benchmark overnight interest rate near zero.

Indian benchmark indexes have now fallen every day so far this week. Rising COVID-19 cases domestically have also weighed on market sentiment.

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

India's central bank may have to delay the start of liquidity normalisation by three months amid the rising cases, analysts say.

In domestic trading, selling was broad based, with almost all major sectors closing in the red. Information technology stocks were the biggest losers, with the Nifty IT index closing down 3.09%.

Software services provider Infosys Ltd fell 3.6% and was the top drag on the Nifty 50.

Amongst individual stocks, Edelweiss Financial Services Ltd ended 5% lower after a report that India's Ministry of Corporate Affairs ordered an inspection of a Edelweiss unit's books after a whistleblower complaint.

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