India's broader NSE Nifty index ended lower on Thursday after the U.S. Federal Reserve set an October start for shrinking its balance sheet and maintained a forecast for another rate increase this year.
MSCI's broadest dollar-denominated index of Asia-Pacific shares outside Japan was down 0.4 percent, shrugging off slight gains on Wall Street.
As widely expected, the Fed said it would begin in October to trim its massive holding of U.S. Treasury bonds and mortgage-backed securities acquired in the years after the 2008 financial crisis.
The Fed signalled it still expects one more interest rate hike by the end of the year, despite a recent bout of low inflation, but ratcheted down its long-term interest rate forecasts, Reuters reported.
The S&P BSE Sensex fell 0.09 percent at 32,370 while the broader NSE Nifty lost 0.19 percent to 10,121.
Among the top Sensex losers: ICICI Bank fell 2 percent, Coal India fell 0.7 percent, ONGC dropped 1.1 percent while Axis Bank lost 1.4 percent.
Banking stocks were among the top laggards. Andhra Bank fell 3.5 percent, Bank of India declined 3.3 percent, Syndicate Bank lost 2.7 percent, Punjab National Bank shed 2.3 percent while Canara Bank was down 1.5 percent.
Coffee Day Enterprises lost 4 percent amid reports that the Income Tax Department conducted searches at multiple locations of the company premises.
But Dr Reddy's Laboratories surged over 7.7 percent after the drugmaker said it got establishment inspection report from U.S. drug regulator for its Srikakulam plant.
Market breadth was in the favour of losers, with about 2 stocks declining to every 1 stock that advanced.