Mumbai, Nov 23 (IANS): Heightened chances of a US rate hike coupled with the upcoming winter session of parliament and derivatives expiry subdued Indian equity markets during the mid-afternoon trade session on Monday.

The barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) was trading 78 points or 0.30 percent down, ahead of an 'unscheduled' US Federal Reserve (US Fed) meeting on Monday.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) was trading marginally in the red during the mid-afternoon session. It was lower by 21 points or 0.27 percent at 7,835.60 points.

The S&P BSE Sensex, which opened at 25,945.14 points, was trading at 25,790.11 points (at 2.00 p.m.), 78.38 points or 0.30 percent down from the previous day's close at 25,868.49 points.

The Sensex so far has touched a high of 25,958.04 points and a low of 25,752.27 points during the intra-day trade.

Market observers said investors were spooked ahead of the 'unscheduled' US Fed meet, the upcoming winter session of parliament and derivatives expiry later this week.

"Though the US rate hike has been priced-in, there can still be a surpise element coming out of this unscheduled meet. This has spooked the investors," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

The US Fed's 'unscheduled' meet is being held to review and determine the advance and discount rates to be charged by the Federal Reserve Banks. 

The last such unscheduled meeting was held in 2012, wherein swaplines were discussed.

The meeting assumes significances as it precedes the federal reserve policy meet in December, when a rate hike is expected to be announced.

In the short term, higher interest rates in the US are expected to lead away FPIs (Foreign Portfolio Investors) from emerging markets such as India. 

"Anxiety is building up on account of the upcoming winter session of the parliament and derivatives expiry. The two events can cause volatility," James said.

Furthermore, investors are glued to political developments to see whether the government will be able to pass key economic legislation during the winter session that begins on November 26 and will run till December 23.

Last week, the government's efforts to reach out to the opposition before the crucial winter session to get the Goods and Services Tax (GST) bill passed cheered the equity markets.

The government needs to pass the GST bill in this session to meet the April 1, 2016, roll-out deadline.