Rates on short-term money market instruments fell 5-10 basis points today as fund houses bought certificates of deposit on view rates were unlikely to rise further, dealers said.
Banks, too, were keen on issuing CDs as most were refinancing their existing papers and building their deposit base target. Banks usually raise funds towards the end of a quarter to boost their deposit base.
"Mutual funds had been holding cash since a long time and were keen on investing in papers as most of them were of the view that the rates were unlikely to rise further," said a dealer with a mutual fund.
Companies were also keen on raising funds, as investors were keen on buying three-month commercial papers.
