BENGALURU, Dec 6 (Reuters) - Indian shares logged losses amid cautious trading on Tuesday, a day ahead of the domestic central bank's interest rate hike decision and on concerns about a prolonged rate-hike cycle by the Federal Reserve.
The Reserve Bank of India is widely expected to raise interest rates by 35 basis points on Wednesday, but the focus will be on the central bank's outlook on growth and prices, especially as India's inflation, though slowing, remains above the RBI's target.
"RBI will focus more on growth and will take the liberty of supporting growth," said G Chokkalingam, founder and managing director of Mumbai-based Equinomics Research & Advisory.
Data on Monday showed U.S. services activity picked up in November and, coming on the heels of robust U.S. payrolls and wage growth data, challenged hopes the Fed might temper its monetary policy amid recent signs of cooling inflation.
Domestically, the signs of cooling inflation and the drop in crude prices in recent months, which is beneficial for a big crude importer like India, have sent the benchmark equity indexes on a rally to all-time highs, hit last week.
The market has, however, wavered in the past three sessions, including on Tuesday, as the RBI decision neared.
"Information technology and banks were top gainers previously. So, there is probably some profit-taking in those sectors right now," said KK Mittal, vice president and investment consultant at Venus India Asset Finance, adding both sectors seemed "fundamentally strong."
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