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* NSE index down 0.21 pct, BSE index 0.16 pct lower
* State election results due out on March 11
* U.S. Federal Reserve meeting next week
By Darshana Sankararaman
March 7 (Reuters) - Indian shares edged down on Tuesday after rising about 0.7 percent in the previous session, as recent outperformers such as banks were hit by profit-taking with analysts warning markets could head for a phase of consolidation this week.
The broader NSE index has been hovering below a key psychological level of 9,000 this month but has been unable to break above it.
The direction of markets will likely hinge on the results of the elections in the northern state of Uttar Pradesh, due out on Saturday, which will have a key influence on Prime Minister Narendra Modi's chances of clinching a second term in 2019.
Meanwhile, investors are also awaiting the U.S. Federal Reserve meeting next week, where it is widely expected to raise interest rates.
"The market is largely seeing oscillations in a very narrow range," said Saurabh Jain, assistant vice-president of research at SMC Global Securities.
"Clouds will be clear only by next week and markets will then take a decisive move. The Fed statement will give more clarity as to how things will shape out in future."
The broader NSE index was down 0.21 percent at 8,944.95 by 0547 GMT, while the benchmark BSE index was 0.16 percent lower at 29,000.65.
Financial stocks fell, led by Axis Bank Ltd and Yes Bank Ltd. Both were down more than 1 percent.
Banks have been among the top gainers this year after a ban on high-value currency notes late last year led to a surge in deposits.
Among the gainers, South Indian Bank Ltd rose as much as 3.21 percent after the Reserve Bank of India removed the bank from its foreign investment caution list.
PNC Infratech Ltd jumped as much as 6 percent to its highest since Feb. 13 after it won an order from National Highways Authority of India to build a six-lane highway in the southern state of Karnataka. (Reporting By Darshana Sankararaman in Bengaluru; Editing by Subhranshu Sahu)