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Informist, Friday, Apr. 4, 2025

By Ashna Mariam George 

MUMBAI – The wait-and-watch mode ahead of the Reserve Bank of India's Monetary Policy Committee's meeting kept yields on corporate bonds steady in the secondary market on Friday, dealers said. Over the past two weeks, yields on corporate bonds fell 25-30 basis points, due to multiple reasons such as buying ahead of financial year end, open market operations announcement, and rate cut expectations.

"It looks like the movement (downward) in yields has taken a pause, we expect the market to be in a tight range until Wednesday (MPC meeting outcome)," a dealer at a mid-sized brokerage firm said. "Can't see any major trigger before that."

The RBI's rate setting panel is scheduled to meet from Monday to Wednesday, and Governor Sanjay Malhotra will announce the decision at 1000 IST on Wednesday. According to an Informist poll of 15 economists, the MPC is expected to lower the repo rate by 25 bps to 6.00%. Some sections of the market also expect the committee to change its stance to 'accommodative' from 'neutral'.

As the market was in a cautious mode, trade volume was lower on Friday, with deals aggregating INR 185.81 billion being recorded on the National Stock Exchange and the BSE combined, down from INR 243.09 billion on Thursday. Mutual funds and banks were active on both buying and selling sides across tenures, dealers said.

"Going into the policy, people would want to take position...all of that is just keeping the churn on, but the levels have not moved so much today (Friday), possibly next week there will be some action," a dealer at a mid-sized private sector bank said.

Bonds issued by REC, Housing And Urban Development Corp., HDFC Bank, National Bank For Financing Infrastructure And Development, LIC Housing Finance, Power Finance Corp., Sammaan Capital, Telangana State Industrial Infrastructure Corp., National Bank For Agriculture And Rural Development, Canara Bank, Small Industries Development Bank of India, and HDB Financial Services were among the most traded on the exchanges.

The primary market of corporate bonds was also dull Friday. On Monday, National Bank for Financing Infrastructure and Development has invited bids to raise up to INR 80.00 billion through two bonds of different maturities. The company plans to raise up to INR 50.00 billion through bonds maturing on Apr. 7, 2035, and up to INR 30.00 billion through another set of bonds maturing on Apr. 8, 2030.

Going forward, market participants expect the primary issuances to pick up in the second half of April. "There would be a slew of issuances...once people are done with their financial results and documents and have more clarity on rates post MPC outcome," the bank dealer quoted above said. 

UDAY BONDS

No Ujjwal DISCOM Assurance Yojana bonds were traded in the secondary market on Friday, according to the Reserve Bank of India's Negotiated Dealing System–Order Matching System.

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Deepshikha Bhardwaj

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