(Updates for morning trade)

By Bharath Rajeswaran and Vivek Kumar M

Sept 15 (Reuters) -

India's equity benchmarks were largely flat on Monday, in

line with Asian peers, ahead of the Federal Reserve's policy

decision later this week, where investors expect the central

bank to resume its easing cycle.

The Nifty 50 was down 0.11% at 25,085.45, while the

BSE Sensex fell 0.04% to 81,865 as of 10:18 a.m. IST.

The Nifty had risen 1.5% last week, marking an eight-session

winning streak on Friday, its longest in a year, buoyed by

optimism around U.S.-India trade negotiations and the government

tax cuts to spur consumption.

On Monday, nine of the 16 major sectors advanced, providing

modest support to the benchmarks but IT stocks, which

had rallied 4.3% last week, pulled back 1% and were the biggest

drags.

Small-cap and mid-cap indexes

added 0.5% and 0.1%, respectively.

Asian stocks traded flat ahead of an action-packed week that

is seemingly certain to see the Fed cut interest rates on

Wednesday, and perhaps leave the door wide open to a series of

reductions.

Lower U.S. rates drag down Treasury yields and the dollar,

pushing flows towards emerging markets such as India.

"There's a sense of caution (in Indian equities) after

the sharp run-up last week," said G. Chokkalingam, founder and

head of research at Equinomics Research.

"Liquidity is tightening due to persistent foreign outflows,

promoter selling, and a shift of funds to robust IPOs. Still,

meaningful progress in U.S.-India trade talks could quickly

spark a sharp recovery."

Among individual stocks, telecom infrastructure firm Railtel

Corp surged 7.6% after winning an order worth 2.1

billion rupees.

Engineering consultant Engineers India and

construction company Ceigall India gained about 2%

each on order wins.

Rice exporter KRBL tumbled 9% after an independent

director resigned, citing corporate governance issues.

Alcobev companies Radico Khaitan and Allied

Blenders rose about 2%, while United Spirits

gained 0.5% after Jefferies initiated coverage with a "buy"

recommendation.