INR seen supported by weak dollar overseas; Muted local equities cap upside

The Indian rupee appreciated 10 paise to 88.60 against the US dollar (provisional) on Thursday, supported by a weak American currency against major rivals overseas. Improving risk sentiment and prolonged US government shutdown is seen dragging the dollar index under 100 mark. Subdued sentiment in domestic equity markets and continued outflow of foreign capital however, prevented a sharp gain in the Indian currency. Key benchmark indexes pared early gains and turned lower after data showed a measure of India's services sector growth fell to a five-month low in October amid competitive pressures and heavy rains. The benchmark BSE swung between gains and losses before ending the session down 148.14 points, or 0.18 percent, at 83,311.01. The broader NSE Nifty index dropped 87.95 points, or 0.34 percent, to 25,509.70. At the interbank foreign exchange, the rupee opened at 88.51 and touched the intraday high of 88.49 against the greenback. The unit also hit the intra-day low of 88.66 before ending the session at 88.60 (provisional) against the dollar, up 10 paise from its previous closing level.

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