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Midcap & smallcap, out of favour
Wed, 23 Jul 01:30 pm

Indian share markets continued to trade strong in the post-noon trading session. Majority of the sectoral indices are trading in the red with realty and power stocks being the biggest losers. IT and capital goods stocks are among the major gainers.

BSE-Sensex is up 81 points and NSE-Nifty is trading 16 points up. BSE Mid Cap is trading 0.2% down and BSE Small Cap index is trading down by 0.6%. The rupee is trading at 60.13 to the US dollar.

Most of the hotel stocks, barring Oriental Hotels, are trading in the red with Hotel Leela and Taj GVK being the major gainers. As per a leading financial daily, the Rs 10 bn rights issue of Tata Group company Indian Hotels Company Ltd (IHCL) will open on 4th August and close on 20th August. The rights issue will offer around 182 m convertible debentures for Rs 55 per unit to existing shareholders. Every shareholder of IHCL holding 40 equity shares will be eligible for nine compulsorily convertible debentures of the company. As per the offer document, IHCL plans to utilize Rs 5.5 bn from funds raised to repay debt while Rs 1.3 bn will be used for renovation/refurbishment of existing hotels and Rs 700 m will be used to finance construction of Vivanta by Taj at Guwahati. The balance proceeds of Rs 2.4 bn will be used for general corporate purposes. IHCL stock is currently trading down by 1.3%.

Private banking stocks are trading mixed. ICICI Bank and Dhanlaxmi Bank are leading the pack of gainers, while ING Vysya Bank and DCB Bank are trading on a weak note. As per a leading business daily, RBI has relaxed norms for banks on loans against jewellery. The country's central bank has removed the Rs 1 lakh ceiling on loans against jewellery where borrower repays all dues with interest in one go at loan maturity i.e. a bullet repayment. In the latest circular, RBI has left it to banks to decide the ceiling and quantum of loans against pledged jewellery used for non-agricultural purpose. However, it had capped the tenure for bullet repayments of such loan at 12 months. The apex bank has also kept the loan to value (LTV) ratio of such loans unchanged at 75% throughout the loan tenure which include current value of gold jewellery and accrued interest. The higher loan ceiling will help banks to enhance their gold jewellery loan portfolio which are generally of ticket size above Rs 1 lakh.

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