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Informist, Wednesday, Jul 31, 2024

BY Vaishali Tyagi

MUMBAI – Yields on corporate bonds ended steady in the secondary market today, as traders avoided placing significant bets ahead of the outcome of the US Federal Open Market Committee's decision on interest rates later today, dealers said.

Market participants will also be closely watching the US Federal Reserve officials' comments to derive the cues, they said. "For secondary market, I don't see much trigger but yes FOMC and Jerome Powell's (US Fed's Chair) comments will be closely watched," a dealer at a mid-sized brokerage fund said. Today, both mutual funds and banks were said to have been on the buying and the selling side in the secondary market respectively. 

While the US Fed is widely expected to stand pat on rates at this meeting, market participants expect some forward guidance from Fed officials regarding the rate outlook, dealers said. Fed Funds futures traders see a 100% chance of a rate cut at the Federal Open Market Committee's meeting in September, according to the CME FedWatch Tool. 

Market participants expect minimal impact from the US FOMC decision on the fixed-income market, but they still remain cautious about Chairman Powell's comments. They will be watching to see if government securities react to the outcome, which may potentially influence the corporate bond market.

Tepid participation led to low trade volume, with deals only aggregating 42.34 bln rupees being recorded on the National Stock Exchange and BSE combined, against 73.42 bln rupees on Tuesday. "The market is silent, there are no triggers, and we expect it to be range bound for a while until something major happens," a dealer at a large-sized public sector bank said. 

Papers issued by Indian Railway Finance Corp, Power Finance Corp, National Bank For Agriculture And Rural Development, Incred Financial Services, Navi Finserv, MAS Financial Services, Muthoot Finance, AYE Finance, Uttar Pradesh Power Corporation, Spandana Sphoorty Financial, Kerala Infrastructure Investment Fund Board, Shriram Finance, HDB Financial Services, and Kotak Mahindra Investments were traded the most on the bourses. 

Dealers said investors remain majorly focused on the primary market, which has witnessed a pick-up in activity lately. "The primary market is where the action's at right now," a dealer at a mid-sized brokerage fund said. On Thursday, Mahindra & Mahindra Financial Services has invited bids to raise 15 bln rupees through bonds maturing on Aug 30, 2027. Market participants are also keeping an eye on Rashtriya Chemicals and Fertilizers, which plans to tap the market by issuing papers maturing in three years to raise up to 3 bln rupees. 

Several housing financiers, non-banking financial institutions, and public sector entities have lined up their bond issuances to raise funds next week as well, dealers said.

UDAY BONDS

In the secondary market, 14.00 mln rupees of Uttar Pradesh's Ujwal DISCOM Assurance Yojana bonds, maturing in June 2031, were traded at a weighted average yield of 7.3320%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed.

BENCHMARK LEVELS FOR CORPORATE BONDS:

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Edited by Akul Nishant Akhoury

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