Primary issuances were up today in the one-year tenure as mutual funds and banks bought such papers in the hope that the Reserve Bank of India (RBI) may cut repo and reverse repo rates soon, dealers said.
Around Rs 1,050 crore of CDs were placed in market today compared with Rs 425 crore yesterday. Rates also eased 5-10 basis points in primary market as investors stepped up purchases today. Typically, any rate cuts announced by central bank impact short-term rates significantly.
Mutual funds and banks also bought CDs today as liquidity continued to remain adequate in the system. In first reverse repo tender, the central bank received Rs 2,115 crore today and no bids for repo tender. Three-month CPs were quoted at 11.00-11.20 per cent compared with 11.00-11.50 per cent, while three-month CDs were quoted at 7.50-7.65 per cent compared with 7.70-7.80 per cent yesterday.
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