The Nifty 50 fell 0.18% to 25,069, failing to hold the 25,100 mark, while the Sensex dropped 119 points, or 0.15%, to 81,786.

Broader markets outperformed, with the Nifty Midcap 100 adding 0.45% and market breadth staying positive with an advance-decline ratio of 5:4. The Nifty Bank index gained 79 points to 54,888.

“Benchmark indices traded largely flat as investors remained cautious ahead of the Fed policy meeting, with the IT index witnessing profit booking after last week’s rally. While a 25-bps rate cut is largely factored in, markets await guidance on the future rate path to gauge the trajectory for bond yields. Strong domestic consumption continues to underpin sentiment and limit downside, while renewed optimism around trade deals and an expected earnings recovery in H2FY26 are further supporting investor confidence,” Vinod Nair, Head of Research, Geojit Investments Limited, said.

Reliance Industries lent support to the benchmarks, but profit booking in auto stocks weighed, with Mahindra & Mahindra and Eicher Motors among the top losers. IT and pharma shares were also weak after tariff-related commentary kept sentiment subdued, dragging Dr Reddy’s Laboratories and Cipla down 1-2%.

Among gainers, Bajaj Finance hit a record high, extending its winning streak to 13 sessions, while Vodafone Idea jumped 6% ahead of a Supreme Court hearing on its AGR plea on Sept. 19.

SBI Cards rose 5% on expectations of higher credit card spends.

PSU stocks stayed in demand, with HUDCO, IREDA and NHPC rising 3-4%, while rail stocks such as RVNL and Siemens gained 2-3% on hopes of higher government orders.

Most realty shares ended with gains, with Prestige Estates, DLF and Oberoi Realty rising around 2% each. GMR Power and Urban Infra surged 11% on strong volumes, while Anant Raj rose 9% after the government released a draft of its new data centre policy.