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Informist, Tuesday, Aug 20, 2024

By Vaishali Tyagi 

MUMBAI – Yields on corporate bonds in the secondary market ended steady today as investors abstained from placing large bets due to lack of fresh triggers, dealers said. A few mutual funds were active on the buying as well as the selling side, while a few banks were seen selling in the secondary market, dealers said. A handful of insurance companies were also said to be active in the longer maturity segment, they said.

Dealers said whatever limited movement was observed in yields was primarily driven by requirement-based trading from mutual funds and insurance companies, while most sections of the market remained on the sidelines.

Volumes picked up today in the secondary market, with deals aggregating to 123.05 bln rupees recorded on BSE and the National Stock Exchange combined, against 90.04 bln rupees on Monday. "See, there is nothing to factor, you require at least something to drag the market in one direction or the other, and that is what the current market is reflecting," a dealer at mid-sized brokerage firm said. Currently, there is no direction even from crude oil prices and geopolitical developments to drive the market, dealers said.

Papers issued by National Bank for Agriculture and Rural Development, Power Finance Corp, Uttar Pradesh Power Corp, Aditya Birla Finance, Bajaj Finance, Axis Finance, Hella Infra Market, Keertana Finserv, Cholamandalam Investment and Finance Co, Navi Finserv, Muthoot Fincorp, Spandana Sphoorty Financial, UGRO Capital, and Shriram Finance were traded the most on the exchanges.

In the primary market, Power Finance Corp today raised 30.50 bln rupees through bonds maturing on Jul 15, 2039 at a coupon of 7.32%. Aditya Birla Finance also tapped the market to raise 900 mln rupees through the reissuance of its bonds maturing on Sep 16, 2026 at a fixed coupon of 8.08%.

Over the next few days, several corporate entities and non-banking financial companies plan to tap the market. On Wednesday, Cholamandalam Investment and Finance has invited bids to raise 10 bln rupees through additional tier-I bonds. InCred Financial Services will also tap the market to raise up to 1.25 bln rupees through bonds maturing on Aug 21, 2026 bonds.

Tata Capital Housing Finance, Satin Creditcare Network, DroneAcharya Services, and Akara Capital are also in line to raise funds through bond offerings on Wednesday.

Merchant bankers said that yields are likely to hover near current levels unless there is an event that significantly changes the outlook on the interest rate trajectory in India or the US. "As none of the events, be it domestic or global are happening, traders are expected to remain on sidelines, with minimal activity for some more time," a dealer at a mid-sized brokerage firm said.

The Reserve Bank of India is expected to remain on a prolonged pause on interest rates at least till December, while the US Federal Reserve is likely to lower interest rates by 25 basis points at its policy meeting in September. Though markets have factored in such an interest rate scenario, they will be on the lookout for signs of a growth slowdown which could quicken the pace of rate cuts in either of the two economies.

UDAY BONDS

In the secondary market, 11.60 mln rupees of Uttar Pradesh's Ujwal DISCOM Assurance Yojana bonds, maturing in March 2028 and March 2029, were traded at a weighted average yield in the range of 7.2492-7.2852%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed.

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

With inputs from Ashna Mariam George

Edited by Ashish Shirke

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