MUMBAI, May 14 (Reuters) - The Indian rupee is expected to open largely unchanged on Tuesday on a lack of momentum and direction due to outflows on the one hand and little appetite to push the currency lower on the other.
Non-deliverable forwards indicate rupee will open at 83.51-83.54 to the U.S. dollar compared with the previous close of 83.53.
Having taken out $2 billion from Indian equities last week on worries over the election outcome, foreign investors sold $538 million more of Indian equities on Monday, as per provisional data put out by exchanges.
The rupee, over the last several sessions, has been holding a narrow range around the 83.50 handle. The 10-day annualized realised volatility has dropped to just 1% on back of the Reserve Bank of India's intervention shadow.
"Right now, there is just no momentum or direction that we can use. Dips (on USD/INR) are difficult to come by and you do not want to push higher because of the RBI," a FX trader at a bank said.
"Let's see now what U.S. inflation brings."
The U.S. consumer inflation data is due on Wednesday, with the U.S. wholesale inflation print out on Tuesday. The recent higher U.S. inflation readings has spurred investors to recalibrate the Federal Reserve rate cut expectations.
That, alongside the softer-than-expected U.S. payrolls data and the less hawkish-than-expected Fed policy outcome, has meant that expectations on how many times the U.S. central bank will cut rates this year have been holding steady at two times.
Economists expect the U.S. producer price index (PPI) to rise 0.3% month-on-month in April.
"The US PPI is the first key test for the bullish sentiment that had built in rates following the dovish Fed and weaker US jobs report," ING Bank said in a note.
KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.60; onshore one-month forward premium at 8.25 paisa
** Dollar index up at 105.27 ** Brent crude futures little changed at $83.4 per barrel ** Ten-year U.S. note yield at 4.49%
** As per NSDL data, foreign investors sold a net $154.8mln worth of Indian shares on May. 10
** NSDL data shows foreign investors bought a net $69.6mln worth of Indian bonds on May. 10 (Reporting by Nimesh Vora; Editing by Janane Venkatraman )
