As per Reuters, the Fed is widely expected to stand pat on interest rates, but may drop hints on the possibility of a rate hike in June.
At 2:56 pm, the S&P BSE Sensex was trading at 29,893 down 27 points, while the broader Nifty50 was ruling at 9,306 down 7 points.
In the broader market, the BSE Midcap pared gains to turn flat, while the BSE Smallcap was up 0.2%.
The breadth, indicating the overall health of the market, turned negative from positive. On the BSE, 1,337 shares declined and 1,227 shares rose. A total of 147 shares were unchanged.
Among sectoral indices, all but Nifty Realty (up 1.5%), Nifty IT (up 1%) and Nifty Auto (up 0.1%) were trading in red.
Among individual stocks, ICICI Bank slipped over 1% ahead of its March quarter results due later in the day.
Lupin, Tata Steel, ICICI Bank and Adani Ports were the top losers on Sensex and dipped anywhere between 1-2%.
Shares of Godrej Properties rallied 14% to Rs 575 after the company announced that it has sold over 1000 apartments across three new project launches since March 2017.
SpiceJet hit a record high of Rs 116.90, up 4% on BSE in intra-day trade, surpassing its previous high of Rs 115 touched on September 5, 2005.
The stock has zoomed 104% thus far in the calendar year 2017 from Rs 57.20 on December 30, 2016, against 12.5% rise in the S&P BSE Sensex during the same period. By comparison, Jet Airways and InterGlobe Aviation added 54% and 38%, respectively, during the same period.
Meanwhile, Engineering company IRB Infrastructure became the first firm to announce a public offer in the InvITs space with a Rs 5,000 crore plus the public issue of its fund opening today.
The IPO, which is the first in this segment, closes on May 5 and commands a price band of Rs 100-102 per unit.
Overseas, Asian stocks were mixed, moderating after earlier strong gains on positive global earnings. MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.1%, while Taiwan gained 0.1%. Singapore and Thailand were also higher, although Chinese shares pulled back almost 0.5%.
(With inputs from Reuters)
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