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Informist, Wednesday, Apr. 30, 2025

By Siddhi Chauhan

MUMBAI – Redemption pressure from mutual funds withered interest in the primary market Wednesday, dealers said. The volume in the secondary market was also low, with mutual funds selling papers in order to get funds, they added. Fundraising through commercial papers was at INR 12.75 billion Wednesday, down from INR 22.25 billion Tuesday. Meanwhile, no fund was raised through certificates of deposit Wednesday. 

"There were no takers today (Wednesday). Mutual funds are facing redemption pressure. They don't have enough funds to buy anything right now," a dealer at a brokerage firm said. "They (mutual funds) were on the borrowing side today in the triparty repo market." 

Birla Group Holdings was the largest issuer, raising INR 5.75 billion through an 11-month paper at 7.30%. HDFC Securities and Kotak Securities also raised INR 2.5 billion each through three-month papers at 6.78% and 6.80%, respectively.  

Fundraising was also limited as money markets are shut on Thursday on account of Labour Day. Usually, issuers refrain from raising funds ahead of a holiday owing to fear of fluctuations in borrowing cost on the next working day, dealers said. On Wednesday, indicative rates on the three-month papers issued by non-banking financial institutions remained unchanged from Tuesday's level at 6.85-7.05% while those on the three-month paper issued by manufacturing companies were at 6.55-6.75%, similar to Tuesday's rates.

No fund was raised by banks through certificates of deposit as most banks had fulfilled their requirements, dealers said. Low credit offtake in April was also a reason for low fundraising, as per dealers. "Banks don't have a high credit offtake in April, this is why issuances are quite low," a dealer at a private sector bank said. "All the issuances we saw in this month was because of rollover requirements only." 

According to dealers, market participants expect fundraising to pick up in the next week as redemption pressure will ease. This could also result in fall in borrowing costs. On Wednesday, funds issued through three-month paper raised by banks rose by 5 basis points to 6.55-6.85%. 

--Primary market

* ICICI Securities, Axis Securities, HDFC Securities, Kotak Securities and Birla Group Holdings. raised funds through CP.

* No funds were raised through CDs.

--Secondary market

* Axis Bank's CD maturing Friday was traded five times at a weighted average yield of 6.1490%.

* ICICI Home Finance's CP maturing Friday was traded twice at a weighted average yield of 6.2112.

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

Edited by Subhojit Sarkar

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