Markets struggled for direction on Tuesday before closing lower, as markets see-sawed between optimism that the Reserve Bank of India will pause rate hikes after Wednesday, and worries that the Fed was likely to keep upping rates for longer.
The Nifty 50 index closed 0.24% lower at 17,721.50, while the S&P BSE Sensex fell 0.37% to 60,286.04. Both the benchmarks swung between 0.3% gains and 0.75% losses during the session.
FMCG stocks fell over 1.1%, dragged by heavyweight ITC, which has taken a breather after rallying to fresh record highs over the last three sessions.
High weightage financials rose 0.13% and capped losses.
The RBI is expected to pause after Wednesday's expected 25 basis points rate hike as it tries to support economic growth and tame inflation.
Meanwhile, Wall Street equities extended their fall overnight after data on Friday showed resilient US jobs markets that heightened concerns that the US Federal Reserve will keep rates higher for longer.
Investors await a speech by Fed chair Jerome Powell due later in the day, for potential cues on the Fed's rate hike trajectory.
"There is a shift happening towards risk-off sentiment in global equities after US jobs data," said Aishvarya Dadheech, director and fund manager at Ambit Asset Management.
Analysts also said that the persistent foreign selling in Indian equities was a cause for concern.
Nineteen of Nifty 50 stocks advanced with Adani Enterprises, up over 15% and Adani Ports among the top gainers, while Tata Steel and Hindalco declined the most.
The rise in key Adani stocks comes after the National Stock Exchange revised circuit limits of Adani Green and Adani Transmission to 5% from 10%, to prevent large movements in price of stocks in a very short time.
The rebound comes after the recent selloff in Adani group stocks, which has caused a rout of over $100 billion in market capitalisation after US short seller Hindenburg's report on January 24.
