India's GIFT Nifty was trading at 21,621.50 as of 8:09 a.m. IST, indicating that the NSE Nifty 50 will open below Tuesday's close of 21,743.25.

Asian markets opened lower. Wall Street equities declined overnight after data showed U.S. inflation slowed less than expected in January, hurting market expectations of an early Federal Reserve rate cut. [MKTS/GLOB]

India's benchmark indexes NSE Nifty 50 and BSE Sensex had a volatile start to the week, losing about 0.75% on Monday, before gaining 0.5% each on Tuesday to recoup some of the losses.

"Although markets ended with gains on Tuesday, it was mainly due to recovery in banking stocks which were hammered in recent sessions due to mixed earnings in financials and central banks hinting at delay in rate cuts," said Prashant Tapse, senior vice president of research at Mehta Equities.

Volatility will remain elevated as stretched valuations are likely to trigger bouts of profit booking, according to analysts.

Profit booking has been more evident in the broader, more-domestically focussed small- and mid-caps. They have dropped 2.39% and 1.51% in February so far, compared to the 0.08% rise in the Nifty 50.

FPIs have sold 25.24 billion rupees of shares in February, after offloading stocks worth 257.44 billion rupees in January, according to National Securities Depository data.

Domestic institutional investors (DIIs), who bought stocks worth 2.74 billion rupees on Tuesday, are on course to extend their buying streak for the seventh month in a row.

STOCKS TO WATCH:

** Oil India: It posted a fall in December quarter profit on lower crude prices.

** Sula Vineyards: It reported higher third-quarter profit on strong premium wine demand.

** Bharat Electronics: It won orders worth 22.82 billion rupees from India's Defence Ministry for supply of electronic warfare suites.

** Wipro: It acquired U.S.-based Aggne Global Inc. for $66 million, to strengthen its consulting and services capabilities in insurance sector.

** Key earnings on Tuesday: Mahindra & Mahindra, NMDC, Gland Pharma.

($1 = 83.0740 Indian rupees)

(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Janane Venkatraman)