Across the world, stocks fell with risk appetite soured after minutes of the U.S. Federal Reserve's last meeting showed most policymakers thought the central bank should begin trimming its $4.5 trillion balance sheet later this year, much earlier than many had expected.

U.S. stock market futures fell 0.3 percent and MSCI's broadest index of Asia-Pacific shares outside Japan was 0.8 percent lower.

"Market is awaiting what RBI does on the liquidity front and that has the potential to impact banks negatively, if there is an increase in CRR (cash reserve ratio)," said Dipen Shah, senior vice president and head of private client group research, Kotak Securities.

The broader NSE index was down 0.41 percent at 9,226.85 as of 0526 GMT, a day after touching a record high of 9,264.95.

The benchmark BSE index was 0.38 percent lower at 29,860.36, hovering below its all-time high of 30,024.74 touched on March 4, 2015.

Banking stocks dragged the NSE index down, with the Nifty Bank index falling as much as 0.55 percent. The bank index has risen about 19 percent this year.

Jindal Steel and Power gained as much as 5.22 percent after posting a 12.3-percent sequential rise in quarterly consolidated steel production.

Phoenix Mills Ltd gained as much as 7.3 percent to its highest in seven months after Canada Pension Plan Investment Board said it would invest in the company's unit. (Reporting by Tanvi Mehta in Bengaluru; Editing by Biju Dwarakanath)