CD issuances drop sharply

Issuances of certificates of deposit (CDs) fell sharply On Tuesday because banks were not keen on raising funds as most of them had placed huge amounts of CDs on Monday, noting the fall in rates, dealers said.

On Tuesday, banks placed CDs worth Rs 650 crore, down sharply from Rs 2,150 crore on Monday. Banks have raised Rs 10,000 crore so far this month. Mutual funds also remained on the sidelines On Tuesday due to limited inflows in their liquid schemes, dealers said.

“There were hardly any buyers in the market On Tuesday as most of the mutual funds have a bullish view on interest rates,” said a dealer with a mutual fund.

Fund managers are of the view that interest rates could rise by 20 basis points post the Union Budget.

Finance Minister Pranab Mukherjee will present the Budget on July 6.

“If the government increases the market borrowing, it could put some pressure on interest rates,” said a dealer with a mutual fund.