The Sensex was trading lower by 53 points, while the Nifty lost 20 points in early trade. Among the top losers in trade were banking stocks including ICICI Bank, HDFC Bank, Axis Bank and Punjab National Bank.
Software stocks which had fallen over the last few trading sessions gained ground on the back of the falling rupee. Stocks that gained from the segment were TCS, Infosys and HCL Tech.
Other Nifty stocks that gained in trade were the Pharma stocks led by Cipla, Lupin and Dr Reddy's. Ranbaxy Laboratories which had crashed 30% on Monday was trading with gains of 4%.
Top losers from the Nifty were Bank of Baroda, Tata Steel, Power Grid Corporation. PSU banking stocks which were in the limelight over the last few trading sessions gave up gains and were trading lower. Among the stocks that lost ground were Syndicate Bank, Oriental Bank, Union Bank and Dena Bank.
Stocks from the oil and gas sector were also trading lower with notable losers being Cairn India, Reliance and ONGC.
Meanwhile, Asian markets were cautious ahead of a key decision by the Federal Reserve on quantitative easing. The Shanghai Composite was trading 1% lower while the Seoul Composite, the Taiwan Weighted and the Japanese Nikkei were also trading lower.
The Fed is expected to take a decision on QE3 tapering in its meeting later on Sept 18.