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 Indian shares dropped on Wednesday, as investors booked profits after a four-session winning streak and awaited the U.S. Federal Reserve's guidance on future rate hikes later in the day.

The NSE Nifty 50 index ended 0.34% lower at 18,082.85 at close, and the S&P BSE Sensex fell 0.35% to 60,906.09. IT and automobile stocks led the declines.

"This is more of profit taking on caution that we have an important Fed outcome coming," said Ajit Mishra, Vice President - Research at Religare Broking.

"Market participants in domestic equities should not read much into this one-day decline and should maintain a positive stance."

The benchmark indexes closed at over nine-month highs in the previous session after climbing over 5% each in October on some strong corporate earnings reports and hopes of a less-hawkish stance from major central banks.

The market has largely baked in a 75-bps hike later in the day, but the Fed's commentary on inflation and any guidance on rate hike plans will be crucial.

Global equity markets rallied, and the dollar eased, with investors appearing to look past another likely rise in U.S. interest rates, hoping instead for a slowdown in monetary tightening.

The Reserve Bank of India's Monetary Policy Committee (MPC) will meet on Thursday, likely to discuss its response to the government after failing to meet its inflation target for three quarters in a row. However, Governor Shaktikanta Das said the RBI would not immediately make details of its report public.

In domestic trading, Nifty's IT and automobile indexes dropped 0.45% and 0.74%, respectively.

Vedanta closed 3.6% higher after its chairman said the metals-to-oil conglomerate expects a $50 billion annual revenue in the next two to three years, roughly double the projected revenues for fiscal year 2023.

LIC Housing Finance ended 8.5% lower after it missed quarterly profit estimates.