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Informist, Tuesday, Feb. 18, 2025

By Ashna Mariam George

MUMBAI – Yields on corporate bonds ended steady in the secondary market Tuesday as most participants kept their activity limited to requirement-based trading, dealers said. "The market was a bit active in the shorter tenure (paper), but nothing much was happening, it was just participants churning their portfolios," a dealer at a mid-sized brokerage said. Money markets are shut Wednesday for Chhatrapati Shivaji Jayanti.

Market participants said they expect the levels to remain steady in the near term. "Market is flat, levels are same... should move around like this for a while... in March if we get some liquidity-easing (measures from the Reserve Bank of India), then we might see some movement," a dealer at another mid-sized broking firm said. 

Liquidity in the banking system has been in deficit since mid-December, with market participants attributing the tightness to the RBI's spot dollar sales to soften the rupee's depreciation. The net liquidity injected by the RBI--a proxy for the systemic liquidity deficit--was INR 1.81 trillion Monday, largely unchanged from INR 1.80 trillion Sunday. Given the tight liquidity conditions, market participants expect the RBI to conduct bond purchases through open market operations in March to infuse liquidity.

On Tuesday, the secondary market saw deals aggregating to INR 137.62 billion on the National Stock Exchange and BSE combined, compared with INR 114.65 billion Monday. Mutual funds and banks were trading shorter-tenure bonds, while insurance companies sold longer-tenure paper, dealers said. According to multiple dealers, buying and selling activity in the shorter tenures led to an increase in trade volume.

Paper issued by Larsen & Toubro, HDFC Bank, State Bank of India, LIC Housing Finance, Sammaan Capital, Punjab National Bank, Telangana State Industrial Infrastructure Corp., National Bank for Agriculture and Rural Development, Bajaj Finance, IIFL Samasta Finance, Small Industries Development Bank of India, HDB Financial Services, India Infrastructure Finance Co., Kotak Mahindra Prime, and Hero Fincorp were traded the most on the exchanges.

The primary market of corporate bonds, however, was dull, with no major deals. Going forward, market participants expect issuers to tap the corporate bond market for their funding requirements.

UDAY BONDS

In the secondary market, Rajasthan's Jun. 23, 2026, Ujwal DISCOM Assurance Yojana bonds aggregating to INR 17.50 million were traded at a weighted average yield of 7.6102%, data from the RBI's Negotiated Dealing System–Order Matching System showed Tuesday.

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Rajeev Pai

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