Indian stock markets closed at record highs on Tuesday after an initial bout of volatility, ahead of the U.S. Federal Reserve's critical meeting to decide on the extent of potential rate cuts. The meeting is set to commence just hours after the Indian market's close.

The BSE Sensex ended the day at 83,079.66, up 90.88 points or 0.11%, marking a fresh record close. Similarly, the NSE Nifty 50 gained 34.80 points or 0.14%, finishing at 25,418.55, just four points shy of its all-time high.

Despite the upbeat close, market breadth remained negative. Out of 4,058 shares traded, 1,714 advanced, 2,239 declined, and 105 remained unchanged.

In sectoral highlights, Hero MotoCorp soared to a record high, gaining 3.25%, making it the top gainer on the Nifty. Bajaj Auto followed with a more than 2% gain, driven by the launch of new Triumph variants. Newly listed Bajaj Housing Finance also hit its upper circuit limit for the second consecutive day.

Ola Electric surged by 10%, hitting its upper circuit limit as well, after receiving a positive brokerage review.

On the downside, SpiceJet tumbled over 6% after announcing plans to raise funds via a Qualified Institutional Placement (QIP). Tata Motors, Eicher Motors, and Tata Steel were among the top losers on the NSE, each shedding around 1%.

Earlier in the day, government data revealed a better-than-expected wholesale inflation rate, which eased to 1.31% in August from the previous month. The decline was attributed to falling fuel prices and a slowdown in food inflation. Analysts had forecasted a moderation to 1.85%, according to a Reuters poll.
Asian Markets Mixed

Elsewhere in Asia, market performance was mixed. Japan's Nikkei 225 fell 378.54 points, or 1.03%, to close at 36,203.22, weighed down by a stronger yen. Meanwhile, Hong Kong's Hang Seng Index surged by 1.37%, or 237.90 points, to end at 17,660.02, lifted by speculation of fiscal stimulus from the Chinese government, which boosted Hong Kong-listed Chinese stocks.

Looking ahead, all eyes remain on the U.S. Federal Reserve's two-day Federal Open Market Committee (FOMC) meeting, which kicks off tonight (IST). Investors and policymakers are eagerly awaiting the Fed's decision on interest rate cuts, with expectations of a cut, although the extent remains under debate.

The decision will be finalized on September 18, and Fed Chair Jerome Powell is scheduled to address the media around 11:30 PM (IST) on the same day. Retail sales data, also set to be released on Tuesday, may still influence the Fed's final decision.