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Informist, Monday, Jan. 6, 2025

By Ashna Mariam George 

MUMBAI – Market participants in the corporate bond market remained in a "wait-and-watch mode" due to a dearth of fresh cues, which led to the yields on corporate bonds ending steady across tenures in the secondary market on Monday, dealers said. "The market was very dull and there weren't many trades happening today (Monday)," a dealer at a mid-sized brokerage firm said. "Market is sluggish, levels are flat due to lack of triggers from domestic and international markets."

Dealers are now awaiting a slew of data points and events from the domestic and international fronts to take fresh positions, they said. "The market is waiting for major cues actually...we have the US non-farm payroll data, the minutes of the US Fed (Federal Open Market Committee)...next week we have the India CPI...that will give further cues," a fixed income fund manager at a mid-sized mutual fund house said. 

Meanwhile, dealers said the first advance estimate of GDP for 2024-25 (Apr-Mar), due Tuesday, might not have a major impact on yield movements in the corporate bond market. "The Q2 (Jul-Sept) GDP growth at 5.4% was obviously on the lower side of our expectations. Market now has a view that the data will be around 6.5% and not anywhere close to 7% and everything seems baked in," the mutual fund source quoted above said.  

According to an Informist poll of 11 economists, India's GDP is expected to grow 6.4% in the current financial year ending March, which is a four-year low. The Ministry of Statistics and Programme Implementation will release its first advance estimate of GDP for FY25 on Tuesday at 1600 IST. The first advance estimate is a key figure for the government as it will form the basis for its FY26 Budget numbers.

The GDP growth data and India's CPI data for December, due Jan. 13, are two important factors that the Reserve Bank of India's Monetary Policy Committee will look into before its meeting in February, the fund manager quoted above said. The RBI will also keep an eye on Donald Trump assuming the office of US president on Jan. 20, and the Union Budget presentation on Feb. 1, he added. 

Market participants said they are cautious ahead of Trump assuming office, due to uncertainty surrounding his policies, including import tariffs, tax cuts, and immigration restrictions. "For Trump coming to power, there is some nervousness regarding the dollar/rupee movement, and the market has taken a back foot as the rupee depreciated," a dealer at another mid-sized brokerage firm said. The rupee has been falling against the dollar for the past 10 consecutive sessions and ended at a record closing low of 85.8275 a dollar on Monday. During the day, it fell to a lifetime low of 85.8400 a dollar. 

On Monday, deals aggregating to INR 71.04 billion were recorded on the National Stock Exchange and BSE combined, compared with INR 63.31 billion on Friday. Mutual funds were active on both buying and selling sides, dealing in papers maturing in shorter tenures, dealers said. Banks and insurance companies were on the sidelines Monday, they added. 

Papers that changed hands on the bourses on Monday include HDFC Bank, LIC Housing Finance, Power Finance Corp., National Bank for Agriculture and Rural Development, and SMFG India Credit Co.

The primary market saw few issuances from non-banking financial companies on Monday. On Tuesday, Bajaj Housing Finance will tap the market to raise up to INR 40 billion through re-issuance of two bonds with different maturities. Indel Money also plans to raise INR 500 million on Tuesday through July 2026 bonds. 

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to INR 312.00 million were traded at a weighted average yield of 7.1402-7.6465%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed on Monday.

* INR 300.00 million of Uttar Pradesh's Mar. 29, 2025 bonds were traded at 7.1402%

* INR 7.00 million of Rajasthan's Jun. 23, 2026 bonds were traded at 7.2971%

* INR 2.00 million of Rajasthan's Mar. 31, 2026 bonds were traded at 7.4152%

* INR 2.00 million of Rajasthan's Jun. 23, 2025 bonds were traded at 7.6465%

* INR 1.00 million of Rajasthan's Mar. 15, 2026 bonds were traded at 7.4171%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Tanima Banerjee

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