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Mid and small caps outperform
Fri, 4 Jul 11:30 am

After opening in the green, the Indian indices are trading flat in the morning session amid outperformance among mid and small cap stocks. Buying is seen in Energy and Pharma stocks and selling pressure is witnessed in Engineering and Metal stocks.

The BSE-Sensex is trading up 17 points. The NSE-Nifty is trading up 2 points. The BSE Mid Cap index is trading up 0.6% and the BSE Small Cap index is trading up 0.9%. The rupee is trading at 59.8 to the US dollar.

The Reserve Bank of India (RBI), has restored the norms for overseas investment by corporates which had been changed last year. The RBI has increased the borrowing limit subject to certain conditions. Corporates will once again be able to engage in any financial commitment up to 400% of net worth. This limit was reduced to 100% of net worth last year. However, any financial commitment exceeding US$ 1 bn or its equivalent in a financial year would require prior approval of the RBI. The RBI had in August 2013 reduced the borrowing limit to stem the fall in the rupee.

Aluminum stocks are trading mixed today. While Nalco is trading firm, Hindalco is in the red. As per a leading business daily, private Aluminum major Hindalco is planning to raise US$ 500 m (about Rs 30 bn) by issue of shares through qualified institutional placement (QIP). This is primarily to repay part of the company's debt. As of March 2014, Hindalco's debt stood at 1.4 times to its net worth. It is believed that the company might hit the market with its issue by next week with a floor price of Rs 168 per share. The company has asked CLSA to manage the issue. The latter expects the company's subsidiary Novelis to be a major beneficiary from the shift made by global automakers from steel to Aluminum, given it a strong franchise and better capacities. Hindalco is trading down 0.7% today.

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