Dec 29 (Reuters) - Indian shares were muted in early trade on Monday, as thin participation and persistent foreign outflows kept risk appetite in check.

The Nifty 50 index fell 0.03% to 26,033.95, while the BSE Sensex index shed 0.06% to 84,988.94, as of 10:15 a.m. IST.

The benchmarks have been trading in a narrow range over the last few sessions as participation has thinned near the end of the year.

The broader small-caps and mid-caps were little changed.

Twelve of the 16 major sectors declined.

The metal index advanced 1.4% with 13 of its 15 constituents rising. The index has gained about 5% in eight sessions, as firmer demand signals out of top consumer China and expectations of two more U.S. rate cuts in 2026 have boosted metal prices. [MET/L]

Among stocks, Vedanta rose 2% after the metal and mining company was declared a successful bidder for the Depo Graphite mining block.

Coforge gained 2% after the IT company said it would acquire artificial intelligence firm Encora at an enterprise value of $2.35 billion to boost its AI capabilities and expand its presence in the U.S. and Latin America.

Hikal fell 2.3% after the pharmaceuticals and crop protection company revealed discrepancies in revenue reporting due to some employees' misconduct and confirmed the reversal of 807 million rupees in revenue for September quarter.

OUTFLOWS AND THIN TRADE

Foreign portfolio investors continue to sell Indian shares, with sales of 3.18 billion rupees ($35.4 million) on Friday, as per provisional data. They have offloaded shares worth a record $18.03 billion so far in 2025.

"With the holiday season and calendar-year close, trading volumes remain thin due to subdued year-end participation, keeping markets muted," said Aakash Shah, research analyst at Choice Broking.

The daily trading volume of Nifty 50 stocks has slipped to 250 million shares in December from 300 million in the previous month.

($1 = 89.9080 Indian rupees)

(Reporting by Vivek Kumar M and Bharath Rajeswaran; Editing by Rashmi Aich and Mrigank Dhaniwala)

By Bharath Rajeswaran and Vivek Kumar M