Sensex, Nifty fall ahead of U.S. Fed decision

(Reuters) - Indian stock markets fell on Wednesday to their lowest level in two weeks, tracking weaker Asian equities as investors grew apprehensive ahead of the U.S. Federal Reserve's two-day policy meeting.

The Fed is expected to hold interest rates steady on Wednesday but investors will focus on how comfortable policymakers are in proceeding with the gradual rate hike path they embraced late last year.

Any negative reaction in global markets could impact foreign flows to India. Foreign investors have bought a net $1.67 billion of shares in March, but still remain net sellers of $1.2 billion this year.

"Fed commentary on future rate hikes will be very critical, and that is something which is keeping markets fairly nervous," said Gautam Sinha Roy, a fund manager at Motilal Oswal Asset Management, which has about 97 billion rupees ($1.44 billion) in assets under management.

The broader Nifty was down 0.66 percent at 7,411.21 at 0646 GMT, while the benchmark BSE Sensex was down 0.73 percent at 24,373.56. Both indexes earlier hit their lowest levels since March 2.

Asian Paints fell 2.2 percent after Nomura downgraded the stock to "neutral" from "buy" and reduced its price target citing valuations.

Cairn India dropped 1 percent after HSBC downgraded the stock to "hold" from "buy," saying the current share price does not offer any meaningful upside to its target price.

Lupin dropped 0.3 percent as brokerage Kotak maintained "reduce" rating on the stock with a "cautious" view, saying market expectations for sales of Fortamet ER, a drug that helps lower blood sugar, are too high.

(Reporting by Aastha Agnihotri in Bengaluru; Editing by Anand Basu)