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Informist, Thursday, Jan. 16, 2025

By Vaishali Tyagi

MUMBAI – Yields on corporate bonds ended on a steady note in the secondary market Thursday because most participants limited their activity to meet their basic portfolio requirements, dealers said. However, during the market hours, yields moved 1-2 basis points down tracking gilts, they added. 

"See, traders are taking a cautious approach, and whatever trading is happening it is all requirement-based, and everyone is awaiting the budget [Union Budget 2025-26 (Apr-Mar)] announcement," a fund manager at a mid-sized mutual fund house said. "Post budget, fresh supply of bonds is expected in the primary market, potentially impacting yield levels in the secondary market also."  The Budget for FY26 is likely to be presented on Feb. 1

For the better part of the day, yields in the secondary market remained largely steady, although some movement was observed on the downside, impacted by the fall in yield levels in government securities. "Yields ended steady (corporate bonds), but they went down 1-2 basis points during the day due to fall in yields on g-sec (government securities) that happened during the day." 

Yields on government securities went down following a Bloomberg report which said the Reserve Bank of India is looking to take further measures to infuse liquidity into the banking system, including on a durable basis. On Wednesday, the Reserve Bank of India's decision to hold variable rate repo auctions on a daily basis to address liquidity concerns also brought back expectations of a rate cut by the Monetary Policy Committee next month, which also led to the fall in yield levels. 

In the secondary market, deals aggregating to INR 77.94 billion were recorded on the National Stock Exchange and BSE combined on Thursday, against INR 81.69 billion on Wednesday. The market saw some selling from a few mutual funds, primarily in three- and five-year tenures, dealers said. Insurance companies and banks were seen actively buying longer-tenure papers, they added. Pension funds remained on the sidelines.

Papers issued by the National Bank for Agriculture and Rural Development, HDB Financial Services, Tata Capital Housing Finance, Axis Wind Farms (Mpr Dam), HDFC Bank, LIC Housing Finance, Mahanagar Telephone Nigam, Indian Oil Corp., Bharti Telecom, Small Industries Development Bank of India were traded most on exchanges. 

In the primary market, activity remained subdued. On Friday, Indian Renewable Energy Development Agency has invited bids to raise INR 15 billion through bonds maturing in 10 years. A flurry of bond issuances is expected from state-owned banks and public sector companies in the coming days, as they have to meet their funding requirements, dealers said.

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating INR 287.18 million were traded at a weighted average yield of 7.2029-7.2954%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed.

* INR 140.18 million of Tamil Nadu's March 2031, February 2032 and March 2032 bonds were traded at 7.2029-7.2954%

* INR 96.00 million of Telangana's March 2026 and March 2031 bonds were traded at 7.2030-7.2074%

* INR 27.00 million of Rajasthan's March 2026 bonds were traded at 7.2057%

* INR 24.00 million of Haryana's March 2026 bonds were traded at 7.2057%

End

Edited by Deepshikha Bhardwaj

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