Indian rupee, the currency benchmark, opened on a flat note and inched 6 paise higher to 73.65 per dollar on Wednesday supported by foreign fund flows, despite weak equities.
The rupee was trading in a narrow range at the interbank forex market. The local unit opened at 73.70 per US currency, and later gained by 6 paise to 73.65, from its previous close.
On Tuesday, rupee settled 13 paise higher at 73.71 per US dollar, tracking positive domestic equities.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.16 per cent to 93.09.
On the domestic equity market front, Sensex and Nifty reversed trend within the first hour of session and turned red on Wednesday, amid weak cues from global equities. Sensex traded 238 points lower at 40,273 and Nifty fell by 53 points to 11,835.
Foreign portfolio investors (FPIs) bought shares worth Rs 3,514.89 crore, while domestic institutional investors (DIIs), were net sellers to the tune of Rs 1,570.80 crore in the Indian equity market on 27 October, provisional data showed.
Brent crude futures, the global oil benchmark, fell 1.72 per cent to USD 40.49 per barrel. Oil price slipped as US crude inventories rose and fear of falling in demand due to rising corona virus cases across many countries.
"MSCI's decision to tweak the Foreign Ownership Factor for Indian equities, taking into account the government's decision to increase the cap on foreign portfolio investment in Indian equities to respective sectoral FDI caps, would push India's weight in the MSCI EM index to 8.8 per cent from 8.1 per cent currently," said Abhishek Goenka, Founder and CEO, IFA Global.
Goenka further added that "this is likely to result in inflows to the tune of USD 4 billion into Indian equities".
According to Goenka, USD-INR is likely to see range bound price action during the day. "We expect an intra-day range of 73.65-74.05," he said.
Worldwide, there were 442 lakh confirmed cases and 11.71 lakh deaths from COVID-19 outbreak. India's COVID-19 caseload breached the 79-lakh mark and the death toll from COVID-19 infections rose to 1.20 lakh.