IT stocks drag India equity benchmarks lower ahead of Fed decision

Indian equity benchmarks fell for a second straight session on Tuesday, led by information technology stocks, as caution ahead of the Federal Reserve’s rate decision and lingering uncertainty over a U.S. trade deal weighed on sentiment.

The Nifty 50 fell 0.47% to 25,839.65 and the BSE Sensex lost 0.51% to 84,666.28. Both indexes have lost about 1.2% so far this week and sit nearly 1.8% away from the lifetime highs hit early this month.

“Failure of the market to hold on to the recent all-time high and absence of fresh triggers for a rally have resulted in some sort of fatigue among investors,” said VK Vijayakumar, chief investment strategist at Geojit Investments.

IT firms, which earn a significant share of revenue from the U.S., lost 1.2% as the focus shifted to the Fed’s meeting later in the day.

Eleven of the 16 major sectors logged losses. The broader small-caps and mid-caps added 1.1% and 0.3%, respectively, following sharp losses on Monday.

While the Fed is expected to cut rates on Wednesday, Wall Street banks have pencilled in fewer reductions for 2026 amid lingering inflation concerns and expectations of a more resilient U.S. economy.

Higher U.S. interest rates typically support the dollar and lift Treasury yields, making emerging-market equities less attractive to foreign portfolio investors.

Meanwhile, U.S. Treasury Secretary Scott Bessent said Washington was still working toward a deal with New Delhi, with Deputy U.S. Trade Representative Rick Switzer also expected to visit India on December 10-11.

This comes even as reports said the U.S. has signalled plans to impose tariffs on rice imported from India.

Budget carrier Spicejet jumped 5.6%, rising for a third straight session, amid operational crisis at larger peer IndiGo.

Indigo snapped a seven-day losing streak and rose nearly 1% after CEO said operations were fully stabilised.

Electronics manufacturer Kaynes Technology gained 13.8%, snapping a four-session losing streak, after Macquarie and J.P. Morgan reiterated their positive views.