MUMBAI (Reuters) - The rupee shrugged off a sluggish start and nosed higher on Wednesday as a more than 1 percent rise in domestic equities helped raise hopes for foreign fund inflows.
Demand for dollars from companies and oil importers were also risks for the rupee.
At 10:50 a.m. (0520 GMT), the partially convertible rupee was at 49.27/28 per dollar, firmer than Tuesday's close of 49.335/345.
"We are seeing some demand for dollars from oil companies and corporates. Also the euro is off its highs from the New York close, but positive equities are providing support to the unit," said Sachin Joshi, a forex dealer at IndusInd Bank.
He forecast a 49.25-49.55 range for the day.
The BSE Sensex climbed 1.2 percent, led by export-driven Infosys after the software bellwether posted quarterly that was roughly in line with expectations.
Oil is India's biggest import item and domestic refiners are the largest buyers of dollars in the local forex market.
Brent crude fell on Wednesday, snapping five days of gains, after OPEC cut a global oil demand forecast and plans for greater powers for a euro zone bailout fund hit a snag, rattling investor confidence.
The euro struggled to make much headway early in Asia after the Slovak parliament rejected a plan to expand the euro zone rescue fund, crucial to containing Europe's spreading debt crisis.
The euro was trading at $1.3623, compared with $1.3611 when the rupee closed on Tuesday. The index of the dollar against six major currencies was at 77.718 points versus 77.739 points on Tuesday.
The one-month onshore forward premium on the rupee was at 19.50 points from 20.25 on Tuesday, the three-month premium was 56.00 points from 54.50 and the one-year premium was 116.50 points, from 114.50.
The one-month offshore non-deliverable forward contracts were quoted at 49.49, weaker than the spot rupee rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and those on the United Stock Exchange and the MCX-SX were at at 49.43. The total traded volume on the three exchanges was $1.33 billion.
