(Updates to close)

By Bharath Rajeswaran

BENGALURU, Sept 18 (Reuters) - Indian shares eased off

record highs on Wednesday, dragged down by information

technology and pharma stocks in the run up to the U.S. Federal

Reserve's rate decision, due in a few hours.

The NSE Nifty 50 shed 0.16% to 25,377.55, while the

S&P BSE Sensex fell 0.16% to 82,948.23.

Both the benchmarks rose about 0.25% each to all-time highs

during the session, before reversing gains.

Information technology companies, which earn a

significant share of their revenue from the U.S., lost 3% to

post their worst session in six weeks.

The Fed is widely expected to lower rates, but the size of

the cut, whether 25 basis points or 50 bps, was not clear. The

odds of a 50-bps cut climbed to 65% from 34% last week.

While a bigger cut will likely see foreign funds shifting to

emerging markets such as India in search of higher returns, it

has prompted fears that the Fed may have begun its easing cycle

a little too late, at the cost of economic growth.

The Fed's reason for its decision and commentary on future

policy will likely influence the near-term trajectory of Indian

equities in terms of foreign inflows and the outlook for the IT

and pharma sectors.

The Nifty pharma index lost 1.5%. In all, nine of

the 13 major sectors declined, on the day.

However, the highest weighted financials sector

added 1.4%, capping benchmark losses.

Despite markets holding ground near all-time high levels

driven by liquidity, there is a gradual churn towards sectors

with cheaper valuations, said Hemang Kapasi, head of equities at

Sanctum Wealth.

Non-bank lender Bajaj Finance rose 3.6% after

Morgan Stanley reiterated "buy" on attractive valuations.

The broader, more domestically-focussed small-

and mid-caps lost about 0.4% and 0.7%,

respectively.

"Some traders took profits at record high levels today,

which caused the intraday drop," said Rupak De, senior analyst

at LKP Securities.

($1 = 83.6940 Indian rupees)