More Stories

Informist, Wednesday, Jul. 2, 2025

By Vidhushi RajPurohit

MUMBAI – After a day of hectic activity, short-term debt market issuances dropped sharply on Wednesday on the back of a sharp rise in liquidity in the banking system, dealers said. The amount raised through commercial papers slumped to INR 4.5 billion on Wednesday from INR 155.5 billion. The majority of issuers stayed away from the primary market as liquidity in the system rose to over INR 3 trillion on Tuesday, dealers said. Though the short-term rates fell by 7-10 basis points, issuers waited for the borrowing rates to stabilise, they said. 

"Rates have come down, but the market is still looking for a stable level before tapping the market, and if you see the liquidity has also shot up," a dealer at a brokerage firm said. "The month has also just started, so gradually we will see some pick up in borrowing too." Borrowing costs on the three-month CPs issued by non-banking financial companies were at 6.15-6.22%, down from 6.22-6.32% Tuesday. Indicative rates on three-month papers issued by manufacturing companies were at 6.00-6.05%. For certificates of deposit, the rates for three-month issuances were at 5.79-5.88%. 

ICICI Securities was the largest CP issuer, raising INR 2.5 billion through papers maturing in September. It raised INR 1 billion at 6.15% and INR 1.5 billion at 6.16%. 

After two consecutive days of no issuances, Indian Bank was the sole CD issuer on Wednesday. The bank raised INR 6.5 billion through a three-month paper at 5.79%. Dealers cited a lack of funding requirements and ample systemic liquidity as the reason for the muted participation in the CD market.  

The banking system was flush with funds owing to the month-end inflows from the government's salary and pension payments. The Reserve Bank of India net absorbed INR 3.32 trillion from the banking system Tuesday, the central bank data showed. Traders expect the systemic liquidity to remain around current levels in the near term on account of the absence of any significant outflows, which could put a strain on the surplus funds. Consequently, some banks will likely look to redeem their maturing papers instead of rolling them over, dealers said. 

The dearth of activity in the primary market led mutual funds to deploy their surplus funds in the secondary market, dealers said. Papers maturing in six to nine months were actively brought by investors, they said. Along with mutual funds, banks also stepped up their purchases in the secondary market. The total CD turnover in the secondary market rose to INR 58.30 billion from INR 31.85 billion Tuesday. The total trades in the secondary market for CPs rose to INR 18.00 billion from INR 11.75 billion on the previous day. "There are funds in the market now, so those with excess (funds) were buying in the secondary market today (Wednesday)," a dealer at a state-owned bank said. 

-Primary market

* ICICI Securities, Godrej Properties, and Motilal Oswal Financial Services raised funds through CPs.

* Indian Bank raised funds through CD.

--Secondary market

* Axis Bank's CD maturing Jul. 15 was traded once at a weighted average yield of 5.5505%.

* Reliance Jio Infocomm Ltd's CP maturing Jul. 17 was traded thrice at a weighted average yield of 5.6511%.

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

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

Edited by Saji George Titus

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000 /+91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.