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| Banks place CDs worth Rs 300 cr |
| NewsWire18 / Mumbai Jun 11, 2009, 22:45 IST |
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Mutual funds preferred to stay on the sidelines due to expectations of redemption pressure from companies ahead of advance tax outflows.
Today, banks placed certificates of deposit (CDs) worth Rs 300 crore, down from Rs 1,000 crore on Tuesday. “Mutual funds were either looking to invest in shorter-tenure papers or holding on to cash,” said a fund manager at a mutual fund. According to dealers, Rs 20,000-25,000 crore will move out of the system for payment towards advance taxes.
Accordingly, CD issuances fell due to low demand from mutual funds. While both demand and supply was lower, CD rates stayed steady today. Today, three-month CDs were quoted at 3.55-3.75 per cent, and three-month CPs were quoted at 4.40-5.20 per cent, both flat from Tuesday’s levels.
Secondary market
Volumes fell today because mutual funds refrained from investing in this market too, dealers said. Today, CDs, mostly those maturing between January and March, were dealt in the secondary market, dealers said.
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