Short-term debt rate rises

Mutual funds continued to invest in papers maturing in up to three months on inflows in their liquid schemes, dealers said. On Thursday, short-term money market instruments worth around Rs 1,710 crore were placed against Rs 2,900 crore on Wednesday.

Fund houses also bought shorter-tenure papers due to the Securities and Exchange Board of India norms (Sebi).

As per Sebi guidelines, all debt securities, including floating rate securities, with residual maturity of over 91 days, will be valued at the weighted average price at which they are traded on the valuation day. Banks issued to meet their deposit growth targets and prop up their balance sheets. This week, banks have already raised around Rs 13,000 crore through CD issuances. Three-month CDs were quoted at 7.1-7.3 per cent as against 7.05-7.25 per cent on Wednesday, while three-month commercial papers (CPs) were quoted at 7.4-7.6 per cent, flat from previous close. Rates in the one-year segment stood at 7.85-8.05 per cent as against 7.9-8 per cent on Wednesday.