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After opening the trading day on a dull note, Indian markets continue to trade flat. Sectoral indices are trading mixed with banking and power stocks leading the losses, while pharma and FMCG stocks are in demand.
The BSE Sensex is trading higher by 33 points and the NSE Nifty is trading higher by 2 points. The BSE Mid Cap index is trading down by 0.6% while the BSE Small Cap index is trading lower by 0.1%. The rupee is trading at 68.31 to the US$.
According to a leading financial daily, the Indian economy grew at a higher than expected 7.3% in the second quarter aided by a bump up in agricultural growth. This is higher than the 7.1% growth recorded in the previous quarter.
The latest second-quarter GDP growth was, however, lower than the 7.6% growth in the same quarter last fiscal. Agricultural output growth came in at 3.3% for the quarter under review against 2% in the same quarter last fiscal. The first quarter had seen an agricultural growth of 1.8%.
Manufacturing growth slowed to 7.1% against 9.1% in the first quarter, mining was down 1.5% against a 0.4% fall in the first quarter. Construction was up 3.5%.
GDP numbers do not reflect the effect of the Modi-led government's sudden demonetisation move. The impact of demonetisation is widely expected to hit economic growth in the third quarter. The decline in economic activity is expected to lower corporate sales volumes and cash flows.
OPEC had agreed on Wednesday its first oil output reduction since 2008 after de-facto leader Saudi Arabia accepted "a big hit" and dropped a demand that Iran also slash output.
The deal also included the group's first coordinated action with non-OPEC member Russia in 15 years. Following the announcements, the price for Brent crude futures, the international benchmark for oil prices, shot up over 10% from below US$ 50 per barrel to US$ 51.92 per barrel.
However, investors remained skeptical as much of the cutbacks could be a reflection of lower seasonal domestic demand amongst crude producers, and thus have a limited impact on seaborne exports.
OPEC produces a third of global oil, or around 33.6 million bpd, and under Wednesday's deal it would reduce output by around 1.2 million bpd from January 2017. That would take its output to January 2016 levels, when prices fell to over 10-year lows amid ballooning supply.
Analysts also expect OPEC and Russia cuts would leave the field open for other producers, especially US shale drillers, to fill the gap. As per the reports, US crude production has already risen by more than 3% this year to 8.7 million bpd, as its drillers have slashed costs in an effort to compete in a lower price environment.
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