Mumbai: The Indian rupee weakened slightly in early trade on Thursday as the dollar’s gains versus major currencies overseas and a choppy start in domestic shares underpinned sentiment.

At 10:10am, the partially convertible rupee was at Rs45.46/47 per dollar, weaker than its Rs45.375/385 close on Wednesday.

“There was some knee-jerk selling towards the end yesterday as one large corporate sold dollars but the market should stay offerish today as flows are expected for NMDC,” said Madhusudan Somani, head of foreign exchange trading at Yes Bank.

“On the downside, decent buying should be there from oil companies,” he added.

Oil is India’s largest import and refiners are the biggest buyers of dollars in the local currency market.

Dealers said they expect a good response to the follow-on share sale to raise upto $2.6 billion in state-run NMDC, India’s largest iron ore producer, which runs from 10-12 March.

Traders would watch stock market performance for cues on capital flows.

Indian shares were trading marginally lower in early trade amid mixed Asian cues, with Tata Steel and Housing Development Finance Corp declining the most.

Foreign fund investments into the local equity market are key in determining the fortunes for the market. Since mid-February, foreigners have purchased nearly a net $3 billion worth of shares.

Last year, record inflows of $17.5 billion had helped the rupee gain 4.7% year-on-year.

“It is also important to watch out for the central bank if the rupee appreciates quite sharply, especially around the previous highs of Rs45.28 levels. Other Asian central banks have also intervened in the last three days,” a senior dealer with a foreign bank said.

The Reserve Bank of India, the country’s central bank, has said several times in the past that it buys and sells dollars via state-run banks to prevent excessive volatility in the foreign exchange market, but does not target any particular level.

One-month offshore non-deliverable forward contracts were quoted at Rs45.46/56, a touch weaker than onshore spot rate.

In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX were both quoting at Rs45.5350, with the total traded volume on the two exchanges at about $950 million.