Indeed it is concerning that the Equity market is quite volatile. At this juncture, investors are now shifting their investments to Corporate Fixed Deposits. Reasons???
- During the last fortnight, it could be seen that the NBFCs like Bajaj Finance and Mahindra Finance have increased their FD rates by 25 to 50 basis points.
- Also, it is predicted that Shriram Finance may offer 25 basis points increase in their deposits w.e.f November 1, 2018.
- This is attributed to the main reason that the NBFCs are in need of more funds to meet the Festive Demands.
- Distributors also are of the opinion that IL&FS default has not in any way hampered the investors’ belief in well-known companies which of course are backed by reputed promoters.
- A sharp correction during the last one month has led to the investors’ shifting from Bank deposits to Corporate FDs.
What is Chemistry?
- Higher the rating, lower will be the interest is the dictum.
- This prompts the distributors to recommend to go for AAA or AA+ deposits.
- Also it is believed that investors should go for investing in companies which have a long standing record.
- Strong Corporate companies are always on a high score over standalone NBFCs.
Distributors recommend the following
- Invest in Fixed Deposits of HDFC Ltd., Bajaj Finance, Mahindra Finance, Gruh Finance, Shriram Transport Finance and PNB Housing Finance.
- It is also seen that Corporte Deposits are recommended over Bank FDs since investors here earn 100 to 200 BPS more. For Example, SBI pays 7.35% interest on an FD and for the same period Bajaj Finance pays 9.1% interest and Mahindra Finance pays 9.5% interest.