A weak dollar in overseas market also boosted the rupee sentiment, a forex dealer said.
Foreign portfolio investors (FPIs) and institutional investors (FIIs) bought shares worth a net Rs 1,767.06 crore yesterday, as per the provisional data released by stock exchanges.
The rupee opened flat at 67.04 a dollar from yesterday's closing level at the Interbank Foreign Exchange (Forex) market and hovered in a range of 66.9550 and 67.0900 before ending at 67.02 per dollar, showing a gain of 2 paise or 0.03 per cent.
The dollar index was trading down 0.47 per cent against a basket of six currencies in the late afternoon trade.
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Meanwhile, the RBI fixed the reference rate for the dollar at 67.0340 and euro at 74.2737.
In cross-currency trades, the rupee fell further against the pound sterling to close at 88.31 from 88.24 yesterday and also dropped further against the euro to settle at 74.47 from 74.31 previously.
The domestic currency also moved down against the Japanese yen to 64.89 per 100 yens from 63.99.
In the forward market, premium for dollar moved down further on sustained receivings from exporters.
The benchmark six-month premium for December moved down further to 165-1/2-167 paise from 167-169 paise yesterday and forward June 2017 contract also declined further to 364.5-366 paise from 366-368 paise.
Meanwhile, the benchmark BSE Sensex dropped by 156.76 points or 0.56 per cent to close at 28,051.86.