Safety is the Priority

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???

  1. 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.
  2. Also, it is predicted that Shriram Finance may offer 25 basis points increase in their deposits w.e.f November 1, 2018.
  3. This is attributed to the main reason that the NBFCs are in need of more funds to meet the Festive Demands.
  4. 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.
  5. A sharp correction during the last one month has led to the investors’ shifting from Bank deposits to Corporate FDs.

What is Chemistry?

  1. Higher the rating, lower will be the interest is the dictum.
  2. This prompts the distributors to recommend to go for AAA or AA+ deposits.
  3. Also it is believed that investors should go for investing in companies which have a long standing record.
  4. Strong Corporate companies are always on a high score over standalone NBFCs.

Recommendations:

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.

 

Author: Admin Bankedge

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