India's GIFT Nifty was trading at 21,681 as of 8:26 a.m. IST, suggesting the NSE Nifty 50 will open near its close of 21,665.80 points on Tuesday.

Asian shares dropped 1% for the second session in a row, continuing a global sell-off. Wall Street fell overnight, dragged by a slide in Apple over demand concerns.

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The Fed minutes, due later in the day, and key labour market data, due later this week, will help assess if the optimism over rate cuts is justified.

While Indian equities have fared relatively better, trading near all-time highs, they have not been immune to the selling pressure as they struggle to break through to fresh record highs.

"Markets are witnessing profit booking after two consecutive months of sharp up-move," said Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services.

The caution, say analysts, will persist ahead of the Fed minutes and India's manufacturing purchasing managers' index (PMI) data.

Foreign institutional investors (FIIs) bought Indian shares worth 16.02 billion rupees ($192.34 million) on a net basis, on Tuesday. Domestic institutional investors (DIIs) sold a net 19.59 billion rupees worth of stocks, exchange data showed.

STOCKS TO WATCH:

** Rail Vikas Nigam won an order worth 1.23 billion rupees to redevelop a railway station in Kerala.

** Avenue Supermarts said its standalone revenue rose 17.19% in the December quarter.

** Hindustan Zinc said its mined metal production jumped 7% in the December quarter. ($1 = 83.2900 Indian rupees)

(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Savio D'Souza)