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Informist, Friday, Aug. 1, 2025

 

By Vaishali Tyagi

 

MUMBAI – Yields on corporate bonds ended the week on a steady note in the secondary market as market participants refrained from taking aggressive positions ahead of the Reserve Bank of India's Monetary Policy Committee meeting outcome on Wedneday, dealers said. Trading was limited to requirement-based transactions, they added. Meanwhile, investors are also awaiting a fresh supply of bonds into the primary market and subsequently into the secondary market to deploy their funds, they said.

 

Dealers added that market participants have muted expectations from the RBI's policy meeting outcome, and consequently, no significant market triggers are anticipated. With expectations largely priced in, secondary market investors are now looking forward to new issuances, particularly from state-owned entities or large financial institutions, to hit the market.

 

"It looks like the corporate bond market has taken a pause in terms of yields as it has been steady for over a week and we expect the market to be in a narrow range until Wednesday (MPC meeting outcome) as traders are avoiding placing large bets," a dealer at another mid-sized brokerage said. "I think, it will still be neutral and no rate cut is seen this time." Most dealers expect the RBI to maintain a neutral stance and pause on rate cuts in its August policy.

Barclays India said in a note, "Having cut the repo rate by 100 basis points in quick succession over the last three policy meetings, we expect the RBI MPC to take a breather in the upcoming Aug. 6 meeting, and deliver a dovish pause, while retaining the stance as 'neutral'."

 

Although the rate easing cycle in India isn't expected to be over, it appears to be nearing its end, with a final 25 bps cut anticipated in October, according to Barclays India.

 

In the secondary market, deals aggregating to INR 115.10 billion were recorded on the National Stock Exchange and BSE combined Friday, up from INR 108.34 billion Thursday. "A good number of participants were there from across segments in the market today (Friday)," the dealer quoted above said. Mutual funds along with a handful of banks were seen buying and selling the bonds in one-to-three-year tenures, while insurance companies, arrangers, and primary dealers actively bought and sold the bonds across tenures in light volume. The activity was seen primarily in three- and five-year tenures, dealers said. Only pension funds were majorly absent from the market, dealers added. 

 

"We are seeing more traction in the shorter segment (one-to-three-year bonds), and traders are refraining from long bets (avoiding trading in longer tenure papers) as they are cautious ahead of the MPC outcome," the dealer said. 

 

Papers issued by REC, HDFC Bank, Indian Railway Finance Corp., Krazybee Services, Keertana Finserv, the Andhra Pradesh Mineral Development Corp., LIC Housing Finance, Cholamandalam Investment and Finance Co., Power Finance Corp., Sammaan Capital, Telangana State Industrial Infrastructure Corp., and National Bank for Agriculture and Rural Development were the most traded on the exchanges. 

 

In the primary market, bond issuances slowed down slightly, with a few companies scheduled to raise funds on Friday. On Monday, some companies plan to raise funds through corporate bond issuances. Summit Digitel Infrastructure plans to raise INR 9.0 billion through bonds maturing in seven years. John Deere Financial India has invited bids to raise INR 4.0 billion through bonds maturing in February 2029. 

 

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to INR 11.50 million were traded at a weighted average yield of 6.6440-7.3353%, according to data from the RBI's Negotiated Dealing System-Order Matching System.

 

* INR 6.00 million of Uttar Pradesh's bond maturing in 2027 was dealt at a weighted average yield of 7.3353%

* INR 3.00 million of Andhra Pradesh's bond maturing in 2030 was dealt at a weighted average yield of 6.6440%

* INR 1.50 million of Punjab's bond with a coupon of 8.21%, maturing in 2026, was dealt at a weighted average yield of 6.8386%

* INR 1.00 million of Punjab's bond with a coupon of 8.22%, maturing in 2026, was dealt at a weighted average yield of 6.8484%

 

Tenure	FRIDAY	THURSDAY
Three-year	6.70-6.72%	6.69-6.72%
Five-year	6.81-6.83%	6.81-6.84%
10-year	7.06-7.08%	7.05-7.08%

 

End

 

Edited by Tanima Banerjee and Rajeev Pai

 

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