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Informist, Thursday, Feb. 27, 2025

By Kabir Sharma

MUMBAI – Issuances in the short-term money market were dull on Thursday as most issuers had met their funding needs earlier in the month and as rates are expected to cool down going forward due to an improvement in banking system liquidity, dealers said. "No banks are interested in raising funds through CDs right now because there are expectations of rates cooling off in March," a dealer at a private bank said. "The liquidity is expected to improve because of month end spending which will cool off the pressure on rates." 

On Wednesday, the net liquidity injected by the RBI--a proxy for the systemic liquidity deficit--was at INR 1.97 trillion largely unchanged from INR 1.96 trillion on Tuesday, as per central bank data. The liquidity deficit was little changed from the previous day's figure as no significant inflows or outflows occured on Tuesday and Wednesday. 

In commercial papers, Kotak Securities Ltd. raised INR 2.50 billion via a three-month paper at 7.81% and Axis Securities Ltd. raised INR 250.00 million via a three month paper at 7.80%. Dealers said that issuances were scarce because most companies had raised funds earlier in the month and they found the current rates unfavourable. 

Despite it being a dull day in the primary market, activity in the secondary market picked up, with deals worth INR 77.75 billion on Thursday, compared to INR 48.10 billion on Tuesday. 

--Primary market

* Kotak Securities, Axis Securities raised funds through CPs.

--Secondary market

* Punjab National Bank's CD maturing on Mar. 27 was traded four times at a weighted average yield of 6.8902%.

* L&T Finance's CP maturing on Friday was traded five times at a weighted average yield of 6.3369%.

The following were the volumes, in INR billion, in the secondary market for short-term debt at 1700 IST, as detailed by the Clearing Corp. of India's F-TRAC platform:

End

US$1 = INR 87.20

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Deepshikha Bhardwaj

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