The rupee depreciated by 8 paise to 69.73 against the US dollar in early trade Tuesday on increased demand for the US currency from importers. Besides, strength in dollar against major rival currencies on stronger US payroll data and rising crude prices also kept pressure on the Indian rupee, dealers said.
However, a higher opening in domestic equities helped in restricting the slide in the Indian unit to some extent, they added.
The rupee opened at 69.65 at the interbank forex market and then fell further to 69.73, down 8 paise over its last close. The local currency however pared the initial loss and was trading at 69.66 at 0947 hrs.
The rupee had declined by 44 paise to close at 69.67 against the US dollar Monday.
Meanwhile, foreign investors (FIIs) remained net buyers in the capital markets, putting in Rs 329.60 crore on a net basis Monday, as per provisional data.
Brent crude futures, the global oil benchmark, rose 0.13 per cent to USD 71.19 per barrel.
Meanwhile, domestic equity benchmarks opened on a flat note Tuesday ahead of the beginning of the earnings season and general elections amid lacklustre global cues.
The BSE Sensex was trading 35.69 points or 0.09 per cent higher at 38,736.22. The gauge had ended 161.70 points lower at 38,700.53 in the previous session.
Similarly, the NSE benchmark Nifty was trading 5.65 points, or 0.05 per cent, higher at 11,598.85 in early session.
Top gainers in the Sensex pack include HCL Tech, Tata Motors, Vedanta, Reliance, TCS, Coal India, L&T, ICICI Bank, ITC and Bajaj Auto, rising up to 1.87 per cent.
On the other hand, Asian Paints Bharti Airtel, Kotak Bank, Bajaj Finance, SBI, Tata Steel and HDFC fell up to 1.72 per cent.
According to experts, investors have turned cautious on rise in oil prices and sharp rally in the last couple of months leading to premium valuation of key indices. Additionally, general elections and start of Q4 earnings season is adding to the cautiousness.
Market may see some profit booking in the near-term given sharp run-up in markets, they added.
Foreign institutional investors (FIIs) purchased Rs 329.60 crore Monday, while domestic institutional investors (DIIs) sold equities to the tune of Rs 623.81 crore, provisional data available with stock exchanges showed.