India Corporate Bonds
Ylds end steady on year-end day; mkt lacks fresh cues
This story was originally published at 18:59 IST on 31 December 2024
Register to read our real-time news.Informist, Tuesday, Dec. 31, 2024
By Ashna Mariam George
MUMBAI – Lack of fresh domestic triggers resulted in steady yields on corporate bonds across tenures in the secondary market on Tuesday, dealers said. Subdued participation ahead of the new year also prompted market participants to refrain from placing large bets on the last day of the Oct-Dec quarter and calendar year, they added.
"The market was a bit better today (Tuesday) but the participation was low on account of the holidays," a fund manager at a mid-sized mutual fund house said. "There was redemption (by mutual funds), but it will reverse and there will be some flows to the market."
Deals aggregating to INR 83.35 billion were recorded on the National Stock Exchange and BSE combined, as against INR 83.91 billion on Monday. In the secondary market, mutual funds were active on the selling side, while banks were active on the buying side, dealing in papers maturing in shorter tenures, dealers said. A handful of insurance companies and pension funds were buying papers of longer maturities, they added.
"There is a liquidity deficit in the banking system, so banks have been the sellers," a dealer at a mid-sized brokerage firm said. "Mutual funds got some fund infusion, so the redemption pressure was less." According to the RBI data, the liquidity deficit widened to INR 2.06 trillion on Monday against INR 1.83 trillion on Sunday.
"Redemption pressure is always there during the quarter end, and it is reversible...from tomorrow (Wednesday) onwards, there will be government spending, so people will start investing more," a fund manager at another mid-sized mutual fund house said.
Bonds issued by REC, HDFC Bank, MSRDC Sea Link, Trust Capital Services, National Bank For Financing Infrastructure And Development, LIC Housing Finance, Power Finance Corp., National Bank For Agriculture And Rural Development, Summit Digitel Infrastructure, and Small Industries Development Bank of India were traded the most across tenures.
On other hand, the primary market remained dull on Tuesday with no major deals being recorded. Going forward, market participants expect the supply of primary issuances to go up. "Q4 (Jan-Mar) will be heavier than other quarters given all the pending requirements, both for public sector entities and private sector players," the first mutual fund manager quoted above said.
UDAY BONDS
No Ujjwal DISCOM Assurance Yojana bonds were traded in the secondary market on Tuesday, according to the Reserve Bank of India's Negotiated Dealing System–Order Matching System.
BENCHMARK LEVELS FOR CORPORATE BONDS:
TENURE | TUESDAY | MONDAY |
Three-year | 7.54-7.56% | 7.54-7.56% |
Five-year | 7.47-7.50% | 7.48-7.50% |
10-year | 7.23-7.25% | 7.22-7.25% |
End
Edited by Akul Nishant Akhoury
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