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Informist, Monday, Aug. 18, 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 due to concerns over the central government's fiscal management after Prime Minister Narendra Modi announced tax reforms in the form of a reduction in goods and services tax slabs on Friday, dealers said. Most participants limited their activity to meeting basic portfolio requirements, they said.

 

Further, dealers cited lack of clarity on additional US tariffs of 25% to be imposed on India from Aug. 27, following a meeting between US President Donald Trump and Russian President Vladimir Putin. Traders are now waiting for developments in follow-up meetings between US and European leaders this week.

 

"Nobody wants to take bets in this uncertain environment. Market participants are waiting to get things stabilised. We expect trading volumes to remain low (in corporate bond market)," a dealer at a brokerage firm said. "Market participants were holding back from taking positions and market saw very few buyers and sellers, as most traders remained cautious."

 

Dealers said the corporate bond market was unaffected by the sharp rise in government bond yields as traders in the market exercised caution. Government bond yields surged as a large corporate house cut gilt positions on concerns of potential fiscal slippage due to the proposed goods and services tax reforms of the central government, dealers said. 

 

On Friday, Modi announced that the government was reviewing the indirect tax regime and planned to introduce next-generation reforms by Diwali. As part of these reforms, taxes on regular-use items are expected to be significantly reduced, which would lead to lower prices for these goods. This move aims to help domestic micro, small, and medium enterprises. The Centre has proposed continuing with the 5% and the 18% tax slabs under the goods and services tax in its recommendations to the rate rationalisation panel constituted by the GST Council, and doing away with the 12% and 28% tax slabs, a senior government source said later Friday. 

 

Dealers said the corporate bond market is expected to see low trading volumes in the near term, with participants adopting a wait-and-watch approach. "For now, corporate bond market remains uncertain, with yields likely to remain range-bound until there is more clarity on the government's fiscal management and trade development front... investors are keeping a close eye on developments," said the dealer quoted earlier.

 

In the secondary market Monday, deals aggregating to INR 87.83 billion were recorded on the National Stock Exchange and BSE combined on Monday, lower than INR 105.47 billion Thursday. Financial markets were shut on Friday on account of Independence Day. Mutual funds along with a handful of banks were seen seeling and buying bonds across tenures, while insurance companies, corporate entities, and primary dealers actively traded papers in shorter tenures in low volume, dealers said. 

 

Papers issued by Vivriti Capital, Krazybee Services, Akara Capital Advisors, Anand Rathi Global Finance, Keertana Finserv, The Andhra Pradesh Mineral Development Corp., Sammaan Capital, Telangana State Industrial Infrastructure Corp., Muthoot Capital Services, Navi Finserv, Kerala Infrastructure Investment Fund Board, and Adani Enterprises were the most traded on exchanges on Monday.

 

In the primary market Monday, several companies were to raise funds aggregating to INR 40.25 billion through corporate bond issuances. On Tuesday, bond issuances in primary market will be in low volume, aggregating to INR 15.70 billion. Cube Highways Trust plans to raise up to INR 8.2 billion through two bond issuances. Kotak Mahindra Prime has also invited bids to raise INR 5 billion through bonds maturing in five years. Kosamattam Finance and Demuric Holdings have invited bids for their respective bonds. 

 

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to INR 34.80 million were traded at a weighted average yield of 6.7263-7.1190%, according to data from the RBI's Negotiated Dealing System-Order Matching System.

 

* INR 16.00 million of Rajasthan's 8.19%, 2026 bond was dealt at a weighted average yield of 7.0178%

* INR 12.00 million of Andhra Pradesh's 7.35%, 2030 bond was dealt at a weighted average yield of 6.7263%

* INR 2.20 million of Tamil Nadu's 8.24%, 2028 bond was dealt at a weighted average yield of 7.1190%

* INR 2.00 million of Uttar Pradesh's 8.14%, 2026 bond was dealt at a weighted average yield of 7.0004%

* INR 1.60 million of Uttar Pradesh's 8.62%, 2030 bond was dealt at a weighted average yield of 7.0037%

* INR 1.00 million of Uttar Pradesh's 8.70%, 2031 bond was dealt at a weighted average yield of 6.7957%

 

BENCHMARK LEVELS FOR CORPORATE BONDS: 

 

Tenure	MONDAY	THURSDAY
Three-year	6.81-6.83%	6.79-6.81%
Five-year	6.91-6.95%	6.88-6.92%
10-year	7.10-7.13	7.08-7.12

 

End

 

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

 

Edited by Avishek Dutta

 

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