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Informist, Monday, Aug. 4, 2025

 

By Vaishali Tyagi

 

MUMBAI – Yields on corporate bonds remained in a narrow range in the secondary market Monday as traders refrained from taking aggressive positions ahead of the Reserve Bank of India's Monetary Policy Committee meeting outcome on Wednesday, dealers said. Most participants limited their activity to meeting their basic portfolio requirements.

 

In the corporate bond market, trading volumes remained subdued due to uncertainty surrounding the upcoming policy outcome. "Nobody wants to take bets in this uncertain environment. Until the policy outcome is clear, we expect trading volumes to remain low," a dealer at a brokerage firm said. "Market participants were holding back from taking positions, seeking clarity from Malhotra's (RBI Governor Sanjay Malhotra) remarks, which are expected to provide direction." On Monday, the market saw very few buyers and sellers, with traders cautious ahead of the policy announcement. The Reserve Bank of India's Monetary Policy Committee commenced its three-day policy review meeting Monday.

 

Dealers said market participants have muted expectations from the RBI's policy meeting outcome, and as a result, no significant market triggers are anticipated. With expectations largely priced in, secondary market trading volumes are expected to pick up only after the policy outcome is announced, providing clarity to market participants.

 

in a research note, Goldman Sachs said the RBI's Monetary Policy Committee is expected to keep the benchmark repo rate and its stance unchanged at the meeting this week, but may revise its projection for inflation and growth downwards. Going forward, Goldman Sachs sees the central bank cutting the benchmark rate by 25 basis points in the Oct-Dec quarter, taking the repo rate to 5.25%. 

 

In the secondary market, deals aggregating to INR 39.04 billion were recorded on the National Stock Exchange and BSE combined Monday, significantly lower than INR 64.54 billion Friday. Mutual funds along with a handful of banks were seen selling bonds in longer tenures, while insurance companies, banks, and primary dealers actively bought and sold the bonds across tenures in light volume. Activity was seen primarily in three- and five-year tenures, dealers said. A few arrangers bought longer tenure papers, dealers added. 

 

Papers issued by Indian Railway Finance Corp., Apex Homes, the Andhra Pradesh Mineral Development Corp., Cholamandalam Investment And Finance Co., Muthoot Finance, Aditya Birla Capital, and National Bank for Agriculture and Rural Development were the most traded on exchanges. 

 

In the primary market Monday, dealers speculated that activity had slowed. They attributed the slowdown to limited participation from some investors, which resulted in lower issuances. Traders expect the activity to pick up in the primary market after the monetary policy announcement. "Broadly, it looks like primary market activity has taken a pause for some time and we expect the market to do a comeback once all of this is over because it will bring out clarity to traders across markets," said the dealer quoted earlier.

 

In the primary market, a few companies plan to raise funds through corporate bond issuances Tuesday. Muthoot Finance plans to raise up to INR 15.0 billion through the reissuance of a November 2027 bond. Motilal Oswal Financial Services and Hero Fincorp have invited bids for their two-year bond issuances to raise INR 5.0 billion and INR 2.5 billion, respectively.

 

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to INR 84.80 million were traded at a weighted average yield of 6.2758-7.0822%, according to data from the RBI's Negotiated Dealing System-Order Matching System. Following are the details of the UDAY bonds dealt:

 

* INR 44.00 million of Uttar Pradesh's 8.75%, 2030 bond was dealt at a weighted average yield of 6.5869%

* INR 15.00 million of Jammu and Kashmir's 8.48%, 2029 bond was dealt at a weighted average yield of 6.9750%

* INR 10.00 million of Rajasthan's 8.21%, 2026 bond was dealt at a weighted average yield of 6.2758%

* INR 7.50 million of Chattisgarh's 8.70%, 2031 bond was dealt at a weighted average yield of 6.7125%

* INR 3.00 million of Tamil Nadu's 7.75%, 2032 bond was dealt at a weighted average yield of 6.6790%

* INR 2.50 million of Tamil Nadu's 7.75%, 2028 bond was dealt at a weighted average yield of 6.4019%

* INR 1.00 million of Tamil Nadu's 7.78%, 2027 bond was dealt at a weighted average yield of 7.0822%

* INR 1.00 million of Tamil Nadu's 7.78%, 2031 bond was dealt at a weighted average yield of 6.7501%

* INR 0.80 million of Rajasthan's 7.40%, 2027 bond was dealt at a weighted average yield of 6.9728%

 

BENCHMARK LEVELS FOR CORPORATE BONDS: 

Tenure	MONDAY	FRIDAY
Three-year	6.67-6.70%	6.70-6.72%
Five-year	6.80-6.82%	6.81-6.83%
10-year	7.05-7.07%	7.06-7.08%

 

End

 

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

 

With inputs from Aaryan Khanna

Edited by Avishek Dutta

 

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