Foreign investors pulled out Rs 828.49 crore from Indian equities on Tuesday, according to provisional data on the National Stock Exchange.

The domestic unit finally settled for the day at 71.01 against the US dollar, down 7 paise over its previous close. On Monday, the rupee settled unchanged at 70.94 against the US dollar.

Fitch Solutions Macro Research (a unit of Fitch Group) in its outlook for the Indian rupee noted that the Indian rupee is expected to remain on a "broad depreciatory path against the US dollar".

"Over the short term, a narrowing of real interest differentials with the US and a worsening terms of trade would put pressure on the rupee, while the central bank''s focus on growth support would likely spur foreign exchange market interventions to limit rupee strength," the report noted.

"After playing on a defensive mode, rupee failed to sustain strength and closed on a marginally weaker note amid buying by the importers and a stronger US dollar index but resisted around 71.04 levels since two trading sessions," Amit Pabari, MD of CR Forex said.

"A lot for the rupee will depend upon the government's meet this week to decide the market borrowing calendar for October-March, as to how government shall match the fiscal deficit target after announcing tax cuts. Rupee shall remain under dilemma as market has reacted to sovereign bond news but there is still uncertainty over the borrowing and until something official is there," Mr Pabari added.

Brent futures, the global oil benchmark, eased 1.34 per cent to $63.90 per barrel.

The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.01 per cent to 98.59.

The S&P BSE Sensex and NSE Nifty 50 indices took a breather and ended on a flat note after two sessions of stellar rally as investors booked profits. Profit booking in Larsen & Toubro, Axis Bank, HDFC, State Bank of India and Kotak Mahindra Bank led to some selling in banking and capital goods shares. However, buying in IT heavyweights like Infosys and Tata Consultancy Services helped the benchmarks to end little changed from their previous close. The Sensex and Nifty in past two sessions surged over 8 per cent.