Mumbai, (IANS) : The Indian equity markets on Wednesday traded on a flat note during the mid-afternoon session as investors were cautious ahead of the outcome of two-day US Federal Reserve’s rate-setting meet later in the evening.

According to market observers, investors remained cautious on the prospect of a US rate hike as it can potentially lead foreign portfolio investors (FPI) from emerging markets such as India.

However, official data released during market hours, which showed that India’s annual rate of inflation based on wholesale prices (WPI) decelerated last month to 2.17 per cent from 3.85 per cent in April, kept sentiments buoyant.

Heavy selling pressure was witnessed in FMCG and metal stocks.

At 12.46 p.m., the wider 51-scrip Nifty of the National Stock Exchange (NSE) inched down 3.55 points or 0.04 per cent to 9,603.35 points.

On the other hand, the 30-scrip Sensitive Index (Sensex) of the BSE, which opened at 31,147.69 points, traded at 31,135.51 points (at 12.47 p.m.) — up 32.02 points or 0.10 per cent from its previous close at 31,103.49 points.

The Sensex has so far touched a high of 31,183.11 points and a low of 31,054.94 points during intra-day trade.

However, the BSE market breadth was bearish — with 1,376 declines and 1,072 advances.

“The equity benchmarks opened flat as investors awaited the outcome of the two-day Federal Reserve policy meeting due tonight. Asian markets, too, traded negative which led our markets to slide into negative territory,” Dhruv Desai, Director and Chief Operating Officer of Tradebulls, told IANS.

“Banking shares edged higher after the central bank said it had identified 12 of the largest loan defaulters and will order lenders to start bankruptcy proceedings against them. However, the banking index has given up most of its gains and traded in the negative zone.”

On Tuesday, the benchmark indices were pulled down to close on a flat note on the back of profit booking and outflow of foreign funds.

The Nifty fell by 9.50 points or 0.10 per cent to close at 9,606.90 points while the Sensex closed at 31,103.49 points — up a mere 7.79 points or 0.03 per cent.