The market pared losses in afternoon trade. At 13:26 IST, the barometer index, the S&P BSE Sensex, was down 55.35 points or 0.15% at 36,214.72. The Nifty 50 index was down 22.50 points or 0.21% at 10,865.85. Local stocks were weighed by weakness in Asian stocks. Caution prevailed ahead of the US Federal Reserve monetary policy decision due on Wednesday.

Domestic stocks dropped in early trade on weak Asian stocks. Stocks extended initial losses and hit fresh intraday low in morning trade. Indices cut losses in afternoon trade.

The S&P BSE Mid-Cap index was down 0.08%. The S&P BSE Small-Cap index was up 0.27%.

The market breadth, indicating the overall health of the market, was positive. On the BSE, 1238 shares rose and 1139 shares fell. A total of 155 shares were unchanged.

Infosys (down 1.57%), Yes Bank (down 1.44%), Wipro (down 1.32%), ITC (down 0.86%), Hindustan Unilever (down 0.84%), HDFC (down 0.67%) and HDFC Bank (down 0.63%), were the major Sensex losers.

Sun Pharmaceutical Industries (up 1.97%), Mahindra & Mahindra (up 1.3%), Vedanta (up 1.22%), Larsen & Toubro (up 1.2%) and Power Grid Corporation of India (up 1.01%), were the major Sensex gainers.

Tata Steel rose 0.62%. Tata Steel and Thyssenkrupp have decided on the members of the future management board for the planned European steel joint venture between the two companies. The announcement was made after market hours yesterday, 17 December 2018.

On the political front, Kamal Nath, chief minister of Madhya Pradesh, on Monday reportedly waived the outstanding short term crop loans of farmers up to Rs 2 lakh as on 31 March 2018, taken from nationalised and the cooperative banks. The decision will benefit as many as 3.4 million farmers and will cost the exchequer between Rs 35,000 to Rs 38,000 crore, according to media reports.

Further, Chhattisgarh chief minister Bhupesh Bhagel, who too took charge on Monday, reportedly announced that his government will waive farm loans worth Rs 6,100 crore of around 1.66 million farmers. He also announced that the government will increase the minimum support price for paddy from Rs 1,700 per quintal to Rs 2,500 a quintal, reports added.

Overseas, Asian stocks were trading lower on Tuesday, tracking losses on Wall Street as traders braced for an interest rate hike by Federal Reserve. US equity indexes slid to their lowest close in 14 months on Monday as investors weighed the impact of the Fed on growth in a market already anxious over trade, geopolitical tensions and a possible government shutdown.

The Federal Reserve holds its final policy meeting of 2018 on Tuesday and Wednesday. The Federal Open Market Committee is expected to raise its short-term interest rate by a modest quarter-point to a range of 2.25% to 2.5%. Investors are closely watching the Federal Reserve monetary policy guidance for 2019. The central bank forecasts three more rate hikes in 2019, but softer global growth could cause a shift in its hawkish stance. The Bank of Japan's monetary policy decision is due Thursday, followed by a briefing from Governor Haruhiko Kuroda. A Bank of England decision is also due on Thursday