After resuming higher, the Sensex slipped into the red, before settling down 1.86 points, or 0.01 per cent, at 32,400.51.
The wider Nifty50 of the National Stock Exchange (NSE) provisionally closed at 10,139.85 points (at 3.30 p.m.) - marginally lower by 7.70 points or 0.08 per cent - from its previous session's close.
The Fed's monetary policy announcement is due later in the day.
Indian equities continued to drop for the second day on Wednesday.
The Nifty after shuttling between 10,171.05 and 10,134.20, ended the day lower by 6.40 points or 0.06 per cent at 10,141.15.
Telecom stocks - Bharti Airtel, Idea Cellular and Reliance Communications fell 3-6 percent after telecom regulator TRAI slashed mobile call connection charge to 6 paise per minute from 14 paise now, effective October 1.
Hamas dissolves Gaza administration in Palestinian unity bid
The announcement comes after days of indirect negotiations between rival Palestinian factions Fatah and Islamist Hamas in Cairo. Punishing measures included reducing electricity payments for the Gaza strip and cutting salaries for civil servants there.
Mobile companies now charge 14 paise a minute for allowing a domestic call from a rival operator to terminate on their network.
"For Bharti Airtel and the like, the impact from the IUC (interconnect usage charges) cut will be larger as they are purely telecom operators as opposed to Reliance Industries, which is more diversified", said Anita Gandhi, whole-time director, Arihant Capital Markets.
MSCI's broadest index of Asia-Pacific shares outside Japan stood little changed. Shanghai added 0.3 per cent, while Hong Kong's Hang Seng added 0.2 per cent.
On the 30 stock Sensex, Larsen and Toubro (2.20 percent), Bajaj Auto (1.86 percent) and Tata Motors (1.73 percent) were the top gainers.
The three major U.S. stock indexes edged higher on Tuesday, logging record closes, with financial stocks providing the biggest boost.