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Informist, Wednesday, Aug 7, 2024

By Richard Fargose

MUMBAI – Issuances of short-term debt instruments, such as commercial papers and certificates of deposits, declined ahead of the outcome of the Reserve Bank of India's three-day Monetary Policy Committee's meeting due Thursday, dealers said.

Today, only 12.00 bln rupees were raised through commercial papers as against 15.50 bln rupees on Tuesday. On Monday, companies had raised 93 bln rupees via commercial papers. 

Today, Tata Power Co raised 5 bln rupees via three-month commercial papers at 7.30% and L&T Finance raised 3 bln rupees via papers maturing on Aug 29 at 7.40%. L&T Finance had raised 4.75 rupees at the same rate on Tuesday. Godrej Properties raised 750 mln rupees each through two three-month papers at 7.37% and 7.38%.

"The market was very quiet today. There were hardly any issuers in the primary market," said a dealer with a large brokerage firm. "In the short end, there was some activity in the secondary market. A few August-September papers were exchanged today. However, the overall volume was subdued as everyone is waiting for further cues from the (RBI) policy." 

The Reserve Bank of India's rate-setting panel is expected to keep the repo rate and the policy stance unchanged this week with inflation still running above the central bank's target and growth staying robust, according to an Informist poll of 30 analysts. However, some market players expect a change in policy stance to "neutral" and a softer commentary by RBI Governor Shaktikanta Das.

Some market participants fear that the central bank may announce steps to mop up the surplus liquidity in the banking system. The liquidity surplus in the banking system was at 2.79 trln rupees on Tuesday compared with 2.86 trln rupees on Monday, data from the RBI showed. The liquidity surplus on Monday was the highest since Jul 6, 2022. 

Owing to huge surplus liquidity in the banking system, banks did not raise any funds through certificates of deposits today. On Tuesday, DCB Bank raised 1 bln rupees via paper maturing in three months at a rate of 7.65%, while on Monday, only Punjab & Sind Bank raised 14 bln rupees.

Rates on three-month CPs issued by non-banking finance companies were steady at 7.60-7.65%, while those on papers with similar maturities issued by manufacturing companies were steady at 7.15-7.20%. Rates on CDs maturing in three months were quoted at 7.15-7.20%.

--Primary market

* Kotak Securities, Tata Power Co, Godrej Properties, and L&T Finance raised funds through CPs

* No CDs were issued today.

--Secondary market

* Axis Bank's CD maturing on Thursday was dealt thrice at a weighted average yield of 6.4922%.

* National Bank For Agriculture And Rural Development's CP maturing on Aug 28 was dealt thrice at a weighted average yield of 6.9505%.

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

With inputs from Siddhi Chauhan

Edited by Saji George Titus

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