At 9:54 am, the Sensex traded 45.54 points - or -0.11 per cent - lower at 40,222.08 and the NSE Nifty down 24.20 points - or -0.20 per cent - at 12,064.35.

Top laggards on the 50-scrip benchmark index at the time were Zee Entertainment, HCL Tech, Asian Paints, Adani Ports and Hero MotoCorp, trading between 1.50 per cent and 2.45 per cent lower.

On the other hand, Yes Bank, NTPC, L&T, Eicher Motors and PowerGrid - trading with advances of between 1.04 per cent and 2.07 per cent - were the top gainers on the Nifty index.

TCS, Infosys and ICICI Bank were the top drags on the Sensex. Strength in Larsen & Toubro, ITC and Reliance Industries kept the losses in check.

The Nifty IT index - comprising information technology stocks - fell as much as 1.23 per cent in morning deals.

The central bank is due to release its statement after conclusion of a three-day policy meeting on Thursday. Two-thirds of 66 economists polled by news agency Reuters expect the MPC to wrap up on Thursday by cutting the repo rate by 25 basis points, but that survey was taken even before the government released far worse than expected economic growth numbers, so expectations for a cut have probably hardened.

The Reserve Bank of India's six-member monetary policy committee (MPC) can draw comfort from subdued inflation. Consumer has stayed below the RBI's medium-term target of 4 per cent for the past nine months.

Losses across Asian equity markets followed falls on Wall Street overnight that saw the Nasdaq drop into correction territory. MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.3 per cent, after earlier rising as much as 0.18 per cent. Japan's Nikkei gave up early gains to turn down 0.42 per cent.

Wall Street had a volatile session overnight as weak economic indicators and an intensifying China-US trade war inflamed concerns about global growth, supporting safe-haven assets such as bonds. The S&P 500 lost 0.28 per cent and the Dow Jones Industrial Average eked out a 0.02 per cent gain.