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Informist, Wednesday, Jan. 15, 2025

By Ashna Mariam George 

MUMBAI – Yields on corporate bonds in the secondary market ended steady Wednesday as investors refrained from placing large bets due to a lack of fresh domestic cues, dealers said. Instead, market participants kept their focus on the primary market, they said. 

"Today, the secondary market was quiet with prices similar to yesterday's," a dealer at a mid-sized brokerage firm said. "Deals were not happening and trade remained sluggish as buyers and sellers waited for favourable levels."

Going forward, the market will take cues from the Budget for 2025-26 (Apr-Mar), likely to be presented on Feb. 1, market participants said. "The government's fiscal deficit target remains to be a tricky thing. The upcoming Budget will provide clarity on the government's fiscal trajectory for the next financial year and revised estimates for the current year ending March," a fixed-income fund manager at a mid-sized mutual fund house said.

Reuters reported on Wednesday that the Budget may project the fiscal deficit target for FY26 at 4.5% of GDP and for FY25 at 10-20 basis points lower than the budgeted 4.9% of GDP. India's GDP growth is estimated to moderate to a four-year low of 6.4% in the current financial year ending March, according to the first advance estimate released by the statistics ministry on Jan. 7. 

In the secondary market, deals aggregating to INR 81.69 billion were recorded on the National Stock Exchange and BSE combined on Wednesday, against INR 48.81 billion on Tuesday. Mutual funds were both on buying and selling sides across tenures, while banks and insurance companies traded in longer tenure papers, dealers said.  

Papers issued by HDFC Bank, Power Finance Corp., Telangana State Industrial Infrastructure Corp., Indian Oil Corp., National Bank For Agriculture And Rural Development, and HDB Financial Services were traded the most on exchanges.

The primary market saw robust activity on Wednesday with Bank of Baroda and Indian Railway Finance Corp. raising funds through 10-year papers. Bank of Baroda raised INR 50 billion through infrastructure bonds at a coupon of 7.23%, while Indian Railway Finance Corp. raised INR 27.80 billion at 7.25%. "Investor demand was split because there were two bonds in the same maturity but still demand was decent for both the bonds," a dealer at another mid-sized brokerage firm said. "Insurance companies, banks, and pension funds were the major investors in both."

Sundaram Finance raised INR 10 billion through bonds maturing on Jan. 13, 2028 at a coupon of 7.70%. ICICI Home Finance Co. raised INR 4 billion through bonds maturing in five years at a fixed coupon of 7.77%. 

UDAY BONDS

In the secondary market, Punjab's March 2031 Ujwal DISCOM Assurance Yojana bonds aggregating INR 50 million were traded at a weighted average yield of 7.3521%, data from the RBI's Negotiated Dealing System–Order Matching System showed on Wednesday. 

End

Edited by Saji George Titus

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