The Indian rupee treaded water in afternoon trade on Tuesday as a swaying stock market failed to provide adequate cues on the direction of fund flows but some offshore dollar demand persisted, weighing on the unit. * At 12:35 p.m., the partially convertible rupee was at 48.46/48 per dollar, slightly weaker than its Monday's close of 48.41/44. * India's main share index .BSESN see-sawed on Tuesday as hopes of a stimulus package and a likely interest rate cut held firm but some profit-booking prevented a sharp rally. See [.BO]. * One-month offshore non-deliverable forward contracts PNDF were quoting at 48.71/86, weaker than the onshore spot rate, indicating a bearish outlook for the local unit and providing a good arbitrage opportunity for banks. * Dealers said broad dollar weakness also underpinned sentiment for the rupee. * The dollar dropped on Tuesday as the Israeli attacks on Hamas raised concerns about oil supplies in the Middle East and spurred buying of traditional safe-havens like the Swiss franc and gold. See [USD/]. (Reporting by Swati Bhat; Editing by Ramya Venugopal)

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