(Updates at close)

By Hritam Mukherjee and Kashish Tandon

Dec 19 (Reuters) - Indian shares fell on Thursday after

the Federal Reserve forecast fewer interest rate cuts in 2025,

souring risk appetite and raising concerns of further outflows,

particularly from foreign investors.

The Nifty 50 declined 1.02% to 23,951.7 points,

while the BSE Sensex dropped 1.2% to 79,218.05, with

both indexes closing below their 50-day averages for the third

straight session.

The Fed delivered a widely expected 25 basis points rate cut

but forecast just two reductions in 2025, half of what

policymakers anticipated in September.

U.S. rate cuts tend to help emerging markets such as India,

as they can boost foreign inflows.

The Fed's hawkish outlook has dampened foreign investors'

risk appetite for local equities, two analysts said.

"Lower pace of rate cuts result in foreign investors going

into a 'risk-aversion' mode and reduce inflows in emerging

markets like India. Hence, markets have seen selling pressure

today," said Siddhartha Khemka, head of research of wealth

management at Motilal Oswal Financial Services.

Indian benchmarks have lost over 3% each this week and are

set for their first weekly decline in five. Foreigners offloaded

stocks worth a net 80.06 billion rupees ($941.2 million) up to

Wednesday.

Financials and IT stocks were the

sectoral decliners, falling 1.2% and 1.3%, respectively.

Indian IT firms are particularly sensitive to U.S. interest

rates, as they earn a significant chunk of their revenue from

the region.

Metals shed 1%, tracking global peers, due to a

stronger dollar, which makes it more expensive for other

currency holders to buy greenback-priced commodities.

The more domestically focussed smallcaps and

midcaps slipped 0.5% and 0.3%, respectively.

ICICI Bank led losses among the top five Nifty 50

heavyweights, closing 2% lower.

Bucking the trend, generic drugmaker Dr Reddy's Laboratories

ended 4% higher after Nomura upgraded the stock to

"buy" from "neutral".

Healthcare tech services provider Inventurus Knowledge

Solutions ended 48% higher in its trading debut.

($1 = 85.0600 Indian rupees)

(Reporting by Hritam Mukherjee and Kashish Tandon in Bengaluru;

Editing by Sonia Cheema and Varun H K)