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Informist, Thursday, Nov. 28, 2024

By Vidhushi RajPurohit

MUMBAI – Trades in the secondary market rose on Thursday, as mutual funds were seen selling short-tenure papers to free up funds amid the month-end redemption pressures, dealers said.  The volume of certificates of deposit traded was INR 62.65 billion, against INR 52.50 billion on Wednesday. For commercial paper, the amount almost doubled to INR 80.25 billion, from INR 47.20 billion the previous day. "Month-end results in the selling of paper by fund houses as they face a cash-crunch on account of redemption obligations," a dealer with a private bank said.

The activity in the primary market was dull as banks and companies stayed on the sidelines, as they have already met their repayment needs for Nov., dealers said. No issuances were reported in the primary market. For CP, Wednesday was a highly active day as companies raised papers amounting to INR 58.5 billion. Banks also remained on the sidelines after raising INR 20 billion on Wednesday.

"Issuances were muted, as those who required funds had already borrowed them early in the month," a dealer with a state-owned bank said. Until Nov. 26, banks have already raised CD amounting to INR 793.75 billion, higher than the redemption figure of INR 629.45 billion. For CP, the total amount raised stands at INR 1.01 trillion, against the maturity figure of 1.14 trillion.

Market participants expect activity in the primary market to pick up in December, on account of both the large redemption figure and the quarter-end funding needs. So far, the redemption amount for Dec. stands at INR 1.46 trillion for CP. While, for CD, the redemption figure for Dec. amounts to 1.47 trillion. "December will be a highly active month as there is a large upcoming maturity figure, and it is also a cyclical thing for the issuances to pick in year-end," a dealer with a brokerage firm said. Additionally, dealers also said that the advance tax outflows for Dec. might put strain on liquidity, which can make banks flock to the debt market to borrow funds. The liquidity deficit on Wednesday was INR 308.48 billion.

The rates on short-term debt instruments saw some movement on Thursday. The three-month commercial paper issued by manufacturing companies was quoted at 7.25-7.30%, the same as the previous close. Paper of similar maturity issued by non-banking financial companies were at 7.45-7.50%, down five basis points from 7.50-7.55%. For CDs, the rates were at 7.18-7.23%, slightly up from 7.15-7.20%. 

--Primary market

* No bank raised funds through CD.

* No company raised funds through CP.

--Secondary market

* Axis Bank's CD maturing on Nov. 29 was dealt seven times at a weighted average yield of 6.7337%.
* Reliance Jio Infocomm's CP maturing on Nov. 29 was dealt five times at a weighted average yield of 6.7537%.

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

NOTE: Details of the deals have been received from market sources.

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Deepshikha Bhardwaj

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