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Informist, Wednesday, Oct. 1, 2025

By Vaishali Tyagi

MUMBAI – Yields on corporate bonds maturing in three years and five years ended 2-3 basis points lower while yields on 10-year paper rose 1-2 bps as traders rushed to buy bonds after Reserve Bank of India Governor Sanjay Malhotra's commentary hinted that the Monetary Policy committee was open to cutting rates further, dalers said.

At the outcome of the MPC meeting Wednesday, the rate-setting panel left the policy repo rate unchanged at 5.50%. It also retained its 'neutral' policy stance. Malhotra noted that the decision was a fallout of the inflation outlook turning out to be more benign than previously projected. 

"Renewed action was seen from mutual funds and they were actively buying in particular in the money market space. The market saw a shift in sentiment after the RBI governor's press conference, where he hinted at room for further rate cuts," said Killol Pandya, head - fixed income, JM Financial Mutual Fund. "Earlier, most traders seemed to be neutral, but the governor's comments may have provided the driver for renewed buying interest."

Buying interest in corporate bonds picked up from various market participants after mutual funds, including banks, and insurance companies bought earlier, with traders focusing on high-yielding short- and mid-tenure bonds to lock in high-yielding bonds. "Earlier when rate was left unchanged, market was neutral and there was no rush seen....but following mutual funds some banks and a few insurance companies were seen buying," a dealer at a brokerage firm said. Traders still held their bets of a 25 basis point rate cut at the MPC's meeting in December," a dealer at a brokerage firm said.

"The scope of further rate cut has increased from the previous MPC meet as is evident in the language of the statement which states that the current macroeconomic conditions and the outlook has opened up policy space for further supporting growth," Trust Group said in note.

In the secondary market, deals aggregating INR 101.30 billion were recorded on the National Stock Exchange and BSE combined on Wednesday, lower than INR 137.28 billion on Tuesday. Mutual funds bought papers aggressively in up to five-year segment. Banks and insurance companies were seen on the buying side across segments in low volume. Pension funds and cororates were largely absent from the market on the policy outcome day.

Papers issued by Rural Electrification Corp. Ltd., Grasim Industries Ltd., Indian Railway Finance Corp. Ltd., Solar Energy Corp. of India Ltd., Krazybee Services Pvt Ltd., Cholamandalam Investment And Finance Company Ltd., Small Industries Development Bank of India, Bajaj Housing Finance Ltd., Power Finance Corp. Ltd., Telangana State Industrial Infrastructure Corp. Ltd., National Bank For Agriculture And Rural Development, and Bajaj Finance Ltd. were traded the most Wednesday. 
 

Activity in the primary market remained lacklustre Wednesday with issuances aggregating to INR 3.23 billion. Money markets are shut Thursday for Mahatma Gandhi Jayanti. On Friday, only one non-banking financial company--Keertana Finserv Ltd.--has invited bids to raise INR 400 million through the issuance of December 2026 bonds.

Primary market activity is expected to pick up next week, with some companies potentially announcing their borrowing plans on Friday. "Now that there's policy clarity, primary issuers who were waiting may re-enter the market with their scheduled borrowing," Pandya said.  

UDAY BONDS

None of the Ujwal DISCOM Assurance Yojana bonds were traded Wednesday, according to data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System.

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Akul Nishant Akhoury

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