More Stories

Informist, Wednesday, Jul 31, 2024

By Siddhi Chauhan 
 

MUMBAI – Lack of demand from mutual funds kept activity in primary segment of the short-term debt market muted today, dealers said. Mutual funds have not been keen on buying short-term debt papers since the last few days due to the cyclical rise in redemptions at the end of the month.
 

Today, issuances through commercial papers rose marginally to 5.00 bln rupees, against 4.75 bln rupees on Tuesday, while funds raised through certificates of deposits amounted to a mere 5.00 bln rupees, against 30 bln rupees on the previous day. 
 

Godrej Industries, Redington, and GIC Housing Finance were the only issuers of CPs today. Godrej Industries raised 1.50 bln rupees through paper maturing in three months at 7.27%. Redington raised 2 bln rupees through the short-term debt instrument maturing in two months at 7.22%, while GIC Housing Finance issued 1.50 bln rupees through paper maturing in three months at 7.44%.
 

For the third consecutive day, issuances through CPs were subdued. Many issuers who wanted to issue funds failed to do so due to a lack of appetite from mutual funds. On Tuesday, Tata Capital Ltd and Julius Baer Capital raised funds through CPs. Tata Capital raised 4.25 bln rupees through CPs maturing in three months at a rate of 7.62%, while Julius Baer Capital raised 1.50 bln rupees through CPs maturing in three months at a rate of 7.99%. 

"Not many deals are taking place today because mutual funds do not have enough funds with them as it is month-end," a dealer at a mid-sized brokerage firm said. "The ones who have funds are buying papers maturing in March or February in the secondary market instead."
 

Due to a lack of activity in the primary market, mutual funds were seen buying papers maturing in March in the secondary market to lock in better yields, dealers said. 
 

Issuances through certificates of deposits also suffered due to lack of appetite from mutual funds. Today, Bank of Baroda was the sole issuers of CD, raising 5 bln rupees through paper maturing in six months at a rate of 7.41%. On Tuesday, State Bank of India, Bank of Baroda, and AU Small Finance Bank had collectively raised 30 bln rupees.

"Issuers who want to raise funds are not able to because dearth of demand from mutual funds," a dealer at a state-owned bank said. "I have heard that many banks could not raise funds today because of the same reason, so they are waiting for the month to end." 
 

Rates on three-month CPs remained at 7.65-7.85%, while those of similar maturity issued by manufacturing companies were at 7.19-7.39%. Rates on CDs were quoted at 7.10-7.30%. 
 

--Primary market

* Godrej Industries, Redington, and GIC Housing Finance raised funds through CPs

* Bank of Baroda raised funds through CDs

--Secondary market

*Bank of Baroda's CD maturing on Oct 21 was dealt twice at a weighted average yield of 7.1702%.

*National Bank for Agriculture and Rural Development's CP maturing on Aug 5 was dealt four times at a weighted average yield of 6.9484%.

At 1700 IST, the following were the volumes, in bln rupees, in the secondary market for short-term debt, as detailed by the Clearing Corp of India's F-TRAC platform:

End

Edited by Manisha Baxla

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.