A strong US employment data triggered concerns that the US Federal could afford to take aggressive rate hike looking at the tight job market, said analysts.

Vinod Nair, head of Research at Geojit Financial Services said, "With the FOMC's outcome around the corner, profit booking and a risk-off mood dragged the domestic market to trade with cuts. Since the market has already priced in a 75 bps rate hike by the Fed, market movement will be determined by their comments on its next moves, said Nair.

While all eyes would be on the Fed's rate hike decision and commentary, on the positive side, the robust Goods and Services Tax collection number for October which came in at second highest ever and expansion in manufacturing PMI supported sentiment, pointed Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd. Strong FIIs flows over the last few days is also providing support to the markets, said Khemka. Given BoE interest rate decision tomorrow along with the Reserve Bank of India's emergency meet, the market is likely to continue with its consolidative move, added Khemka.

Profit booking was seen in some of the rate sensitive sectors like realty, and auto while telecom sector remained under pressure. Metals gained the most among sectors. The broad markets outperformed as the smallcap index ended in the green

Most of the Asian markets traded volatile today with Japan ending with losses and Seoul, Shanghai and Hong Kong closing higher. Chinese equities rebounded on growing speculation that the country will scale back its strict zero-covid policy, said Deepak Jasani, head of Retail Research at HDFC Securities.

European stocks and US futures were little changed after euro-area manufacturing activity sank to the lowest level since the first covid-19 lockdown in 2020 as record inflation and a weakening global economy erode demand for goods, added Jasani.

Overall experts are of the view that globally markets are waiting for the Fed commentary tonight. The 75 bps rate hike is already being discounted by the markets. However Fed's commentary will be watched for and markets will take cues from the same. The Fed is likely to continue with its hawkish stance but any mildly dovish signal will be positive for markets, said analysts.

Domestic markets will react to the outcome of the US Fed meet in early trade on Thursday and then the focus would shift to the MPC's special meet, said Ajit Mishra, VP -Research, Religare Broking Ltd.

The outcome of these events could trigger some volatility but the market tone is likely to remain largely positive, he added.

The markets are also taking cues from the September quarter results. The strong performance of banks, and traction seen in sectors as automobiles remain key positives. Manufacturing is seeing margin pressure but is on expected line and benefits of lower commodity costs will start accruing from ensuing quarters, analysts said.