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 Indian benchmarks are set to open lower on Wednesday, with a tax hike on equity trading weighing on investor sentiment, while reactions to the quarterly earnings of consumer goods major Hindustan Unilever and non-bank lender Bajaj Finance will be in focus.

The GIFT Nifty was at 24,403.5 points as of 7:59 a.m. IST, indicating that the NSE Nifty will open below its Tuesday's close of 24,479.05.

The blue-chips slipped 1.6% on Tuesday after the government hiked the tax rate for capital gains from equity investments and equity derivatives trades.

However, they erased most of the losses helped by a jump in consumer stocks after the government announced $32 billion for rural programmes in its union budget.

"The surprise increase in short-term and long-term capital gains tax is a negative for markets," said Nikhil Ranka, chief investment officer of equity alternatives at Nuvama Asset Management.

"The focus seems to have shifted from capex thrust to employment generation. Thus, there could be some pressure in the near term on defence and railway stocks," Ranka added.

Street reaction to the quarterly earnings of Hindustan Unilever will be in focus after it reported higher first-quarter profit on Tuesday helped by price cuts and recovery in its key home care business.

Shares of Bajaj Finance will also be closely watched after the non-bank lender reported higher June quarter profit on loan growth.

Meanwhile, Asian shares dropped on the day after U.S. stocks ended lower overnight as investors focussed on earnings from major companies. [MKTS/GLOB]

In domestic equities, foreign investors net sold shares worth 29.75 billion rupees (around $355 million) on Tuesday, the highest outflows since June 26, while domestic investors net bought shares worth 14.19 billion rupees, as per exchange data.

STOCKS TO WATCH:

- ICICI Prudential: Company reported a rise in its first-quarter profit aided by strong demand for market-linked products.

- United Spirits: Company reported a bigger-than-expected rise in first-quarter profit helped by strong demand for its premium alcohol brands.

- Torrent Pharmaceuticals: Company missed Q1 consolidated net profit estimates.

- Earnings in focus: Axis Bank, Larsen and Toubro, SBI Life Insurance

($1 = 83.7050 Indian rupees)