Indian shares reversed intraday gains on Thursday, as a slide in Reliance Industries overpowered the rise in IT stocks, while investors turned their focus to the release of Reserve Bank of India's (RBI) policy meeting minutes, after market hours.

The Nifty 50 settled 0.29 per cent lower at 19,386.70, while the S&P BSE Sensex fell 0.28 per cent to 65,252.34. Both the benchmarks had gained 0.7 per cent during the session.

Domestically focused mid-caps rose 0.24 per cent, while small-caps, which scaled record highs, reversed gains.

Analysts said the outperformance of mid- and small-caps over the blue-chips in 2023 was driven by robust retail inflows and hopes of near-term returns.

Reliance Industries lost 1.68 per cent after a $1 billion investment by Qatar Investment Authority for a 1 per cent stake in its retail arm, Reliance Retail Ventures.

While the deal reaffirmed the retail unit's robust valuation, it would lead to a slight reduction in the parent's sum-of-the-parts (SOTP) valuation, according to analysts at Motilal Oswal.

Reliance, which has a 9.87 per cent weightage in the Nifty 50, has lost 3.01 per cent this week so far and is slated to see its worst week in over five months, if losses hold.

Jio Financial Services, spun off from Reliance, hit the 5 per cent lower circuit for a fourth session in a row since listing on Monday.

On the other hand, IT firms, which earn a significant share of their revenue from the United States, gained 0.61 per cent, following an overnight Wall Street rally led by chipmaker Nvidia and easing rate concerns. Asian markets edged higher.

"Some amount of correction is required in the markets," said Saurabh Jain, assistant vice president - research (retail equities) at SMC Global Securities.

"It is important that investors stay stock-selective and cautious and keep their exuberance in check."

The Reserve Bank of India's policy meeting minutes is scheduled to be released at 5 p.m. on Thursday.

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