MARKET EYE-Indian certificates of deposit rates jump

* Yields on both the Reuters three-month certificate of deposit
(CD) benchmark and the one-year CD
rose by 10 basis points each as dealers cited strong selling by
funds.
* Traders said funds were selling due to liquidity tightness as
their short-term funds are attracting less inflows.
* Lenders were also preparing to issue CDs to meet deposit
growth targets ahead of the end of the January-March quarter,
bankers said.
* Another factor is the prospect of less RBI bond purchases via
open market operations, which would keep liquidity tight despite
a cut in the cash reserve ratio,
* "Selling was seen by foreign banks post central bank
governor's press meet as there was no concrete statement on
OMOs," said Ashish Jalan, manager, SPA Securities, discussing an
afternoon conference call with analysts by RBI Governor Duvvuri
Subbarao.
* Cash conditions worsened with banks borrowing 1.04 trillion
rupees from the RBI, double the central bank's stated comfort
zone for the cash deficit of 600 billion rupees.
* The three-month CD benchmark ended at 8.55 percent, while the
one-year CD ended at 8.80 percent.

(archana.narayanan@thomsonreuters.com/
archana.narayanan.thomsonreuters.com@reuters.net)