Indian shares traded lower on Tuesday, led by a decline in tech stocks, after an unexpected pick-up in the U.S. services activity raised concerns about a prolonged rate-hike cycle by the Federal Reserve.

The S&P BSE Sensex fell 0.51% down at 62,509.29, as of 11:10 a.m. IST. The NSE Nifty 50 index fell 0.52% to 18,604.60.

All the major sectoral indexes declined, led by a 1.29% slide in IT stocks, followed by a 1% drop in the metals index.

The U.S. services activity picked up in November, following robust U.S. payrolls and wage growth data, challenging hopes that the Fed might slow the pace and intensity of its rate hikes amid recent signs of cooling inflation.

Domestic traders, meanwhile, waited for the Reserve Bank of India's monetary policy decision on Wednesday, in which the central bank is expected to raise interest rates by 35 basis points.

Some analysts said while strong economic data from the U.S. brought worries about a hawkish Fed stance, the RBI's policy may not have a one-to-one correlation with the Fed, given signs of inflation moderation in India.

India's annual retail inflation eased to a three-month low in October, helped by a slower rise in food prices and a higher base effect.

"RBI will focus more on growth and will take the liberty of supporting growth," said G Chokkalingam, founder and managing director of Mumbai-based Equinomics Research & Advisory.

Among stocks, Hindalco Industries, Tata Steel , JSW Steel were the top Nifty losers, falling between 2.7% and 1.9%. ($1 = 81.8900 Indian rupees) (Reporting by Bharath Rajeswaran and Akansha Victor in Bengaluru; Editing by Janane Venkatraman, Dhanya Ann Thoppil and Nivedita Bhattacharjee)