Indian equity benchmarks slipped into the red after a largely flat start on Tuesday, as losses in IT and auto stocks offset gains in metal and oil & gas stocks. Investors awaited more of corporate earnings from India Inc for domestic cues, a day after Axis Bank, Tech Mahindra and Tata Steel reported their quarterly numbers.

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Globally, the mood in markets remained sombre as the FOMC geared up to start a two-day policy meeting later in the day, following which the Fed is widely expected to announce a hike in the key interest rate.

Both headline indices fell as much as 0.8 percent in early deals. The Sensex lost 470.3 points to 55,295.9 at the weakest level of the day so far and the Nifty50 slid to as low as 16,495.6, down 135.5 points from its previous close.

A total of 19 stocks in the Nifty50 basket opened higher, with the Bajaj twins, Tata Steel, ONGC and Bahrti Airtel being the top gainers.

Britannia, Coal India, Titan, Nestle and Eicher — rising up to half a percent — were also among the top gainers.

On the other hand, Axis Bank, Infosys, HDFC Life, IndusInd, Asian Paints, SBI Life and JSW Steel — down around half a percent — were among the top blue-chip laggards.

Financial stocks saw mixed moves.

Axis Bank shares succumbed to selling pressure even as the private sector lender's quarterly performance beat Street estimates. Analysts remained wary of a slowing business momentum at India's fifth largest bank by market value.

The Tech Mahindra stock gave up initial gains after the IT major reported a quarterly net profit that was down 24.8 percent sequentially and fell short of Street expectations.

Tata Steel shares fell a day after the steel-making giant reported a 20.5 percent fall in quarterly revenue. Weakness in the stock came about even as the company reported an all-round strong performance driven by its European unit.

The domestic demand environment is good but globally, it is a little clouded with Chinese demand being uncertain, Gurmeet Chadha, Managing Partner and CIO at Complete Circle Consultants, told CNBC-TV18.

Zomato shares hit a 52-week low for a second straight day.

"Globally, the dark cloud on the horizon is the threat of an imminent US recession impacting world economic growth. The jury is still out on whether the US slips into a recession or not, but a global growth slowdown appears inevitable," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

"Even though the Indian economy is resilient, a global growth slowdown will impact India too. From the fundamental perspective, there is a limit to market upside, said Vijayakumar, who believes stretched market valuations might again turn FIIs sellers.

Foreign institutional investors net sold Indian shares for a second straight day on Monday following four back-to-back days of buying.

Overall market breadth remained in favour of the bears, as 1,198 stocks rose and 1,944 fell on BSE.

Global markets

Equities in other Asian markets saw mixed moves on Tuesday mirroring the trend on Wall Street overnight, with MSCI's broadest index of Asia Pacific shares outside Japan flat in early hours. Japan's Nikkei 225 was down 0.1 percent.

S&P 500 futures were down 0.3 percent. On Monday, the S&P 500 and the Dow Jones rose up to one third of a percent but the tech stocks-heavy Nasdaq Composite declined 0.4 percent.

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