Banks and mutual funds stepped up their investment in primary issuances as the rates moved up by 5-10 basis points, dealers said. |
There was a slew of primary issuance today as banks and few companies rushed to raise funds on fears of liquidity tightening in next few weeks. |
"We expect liquidity will tighten by September so, in order to meet banks' short-term requirements certificates of deposit are being issued," said a dealer at a private bank. |
"With every primary issue there was further pressure on the other issuers to offer certificates of deposit at 5-10 basis points higher," said a fund manager. Amid increased supplies, investors continued to stay reluctant, pushing rates up 5-10 bps. |
SECONDARY MARKET |
Trade was dull as most mutual funds and banks invested in primary issues to get better returns, dealers said. |
"There were no buyers in secondary market as liquidity is expected to squeeze and they hope to get better rates in near future," said a dealer at fund house. |
Mutual funds continued to be major sellers while some banks were on the buying side. |
State Bank of India's CDs maturing in May were dealt at 9.10 per cent compared with 8.97 per cent on Monday. |
Today's issuances include: |
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