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BENGALURU -Indian shares closed lower on Thursday for a third straight session as losses in technology stocks outweighed gains in banks, while Asian Paints fell over 5% after higher raw materials costs dented profit, highlighting inflation concerns.

The NSE Nifty 50 index fell 0.5% to 18,178.10, while the S&P BSE Sensex dropped 0.6% to 60,923.

The Nifty IT index was the top drag among the sectoral indexes, falling 2.5%.

Positive global cues are likely to be overwhelmed by domestic concerns like high valuations that have become unsustainable and rising commodity inflation, which will impact the margins of firms, said V K Vijayakumar, chief investment strategist at Geojit Financial Services.

Shares of Asian Paints fell 5.3% after the company's profit was hurt by a near 50% jump in total expenses, including a 72.7% rise in cost of materials consumed.

Analysts said the Indian market was seeing consistent selling from institutional investors, concerned over higher valuations.

Domestic institutional investors sold $1.03 billion worth of securities in Indian capital markets in the past one week, Refinitiv data showed.

Nifty trades at a price-to-earnings ratio of 22.8 times forward earnings estimates, according to Refinitiv Eikon data, indicating a stretched valuation.

The Nifty bank index rose 1.3%, while the public sector bank index gained 2.7% on expectations of strong results during the quarter for lenders.

Bank of Maharashtra rose as much as 9% after its quarterly profit doubled and asset quality improved.

Future Retail fell 4% after a Singapore panel ruled that the retailer must take part in arbitration over a commercial dispute with Amazon.com Inc.

Department store chain Shoppers Stop rose as much as 20% on a smaller loss in the September quarter.

(Reporting by Nallur Sethuraman and Gaurav Dogra in Bengaluru; Editing by Shailesh Kuber)