Issuances of certificates of deposit fell on Thursday because fund houses preferred to remain on the sidelines due to limited inflows in their schemes, dealers said.
“Fund houses preferred to remain on the sidelines due to limited inflows in their schemes and on view that the rates could rise next week as the central bank is expected to hike policy rates,” said a dealer with a mutual fund.
Most market participants are of the view that the Reserve Bank of India will hike policy rates by 25 basis points at its third quarter monetary policy review January 25.
The three-month certificates of deposit were dealt at 9.05-9.25 per cent, unchanged from Wednesday. Three-month commercial papers were quoted at 9.50-9.70 per cent, compared with 9.40-9.60 per cent Wednesday.
Rates on one-year papers were at 9.60-9.80 per cent, compared with 9.65-9.85 per cent Wednesday.
“Banks are also keen on issuing CDs as they expect the rates to rise next week thus making it more expensive to raise funds,” said a dealer with a state-owned bank.
