BENGALURU, Oct 29 (Reuters) - Indian shares closed in the red for the third straight session on Friday, dragged by banks and IT firms, with heavy outflows from foreign investors adding to concerns of overvaluations. The blue-chip NSE Nifty 50 index (.NSEI) fell 1.04% to 17,671.65 and the benchmark S&P BSE Sensex (.BSESN) closed down 1.1% to 59,306.93. Both the indexes fell for a second straight week, losing more than 2%. Foreign institutional investors have sold $1.17 billion in Indian equities this week as of Thursday, Refinitiv data showed. "The valuation risks have been one the main concerns for foreign investors," said Joseph Thomas, Head of Research, Emkay Wealth Management. "Few sections of the market expect growth momentum to slow in the wake of sticky inflation." On Thursday, Morgan Stanley downgraded Indian equities over expensive valuations, joining Nomura and UBS, and said it expected consolidations after a more than 25% gain in both benchmark indexes. Mixed global markets and waning interest from domestic institutional investors were also dragging markets, said Ajit Mishra, vice president of research at Religare Broking. Shares of Indian Railway Catering and Tourism Corp (IRCTC) (INIR.NS) closed down 7.4%, after falling as much as 30% earlier in the session, as the government reversed its decision to take half the state-owned company"s revenue from convenience fees. read more Among individual stocks, generic drugmaker Dr Reddy"s Labs (REDY.NS) rose as much as 7.6% after strong quarterly profit, while state-owned natural gas distributor GAIL (GAIL.NS) surged as much as 6% after its profit more than doubled. Meanwhile, the Indian government re-appointed Shaktikanta Das as the governor of the Reserve Bank of India for another three years. read more