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Informist, Thursday, Dec. 4, 2025

By J. Navya Sruthi

MUMBAI – Yields on corporate bonds of five-year tenure ended slightly higher in the secondary market Thursday as mutual funds sold bonds to book profits, dealers said. However, yields on three- and 10-year bonds ended largely steady from Wednesday as traders remained cautious in these segments ahead of the Reserve Bank of India's Monetary Policy Committee meeting decision Friday, dealers said.

Mutual funds switched bonds of similar maturities in their portfolios to book profits while remaining invested, a dealer at a brokerage firm said. Mutual funds were selling due to redemption pressure, which pushed yields higher. They were mostly active in five-year tenure bonds, dealers said.

Earlier in the day, yields fell tracking government bonds as the rupee recovered from its record low of 90.4225 against the dollar, a dealer at another brokerage firm said. The 6.33% 2035 bond recovered, tracking the rupee's appreciation against the dollar. The rupee rose above the psychologically crucial 90-per-dollar mark to a high of 89.8675 per dollar.

Trading activity has slowed in both primary and secondary markets, with traders adopting a wait-and-watch approach ahead of the RBI policy outcome, dealers said. Market participants expect clarity on the policy decision to guide their next moves, with dealers likely to reassess their positions once the outcome is announced.

Deals aggregating to INR 60.93 billion were recorded on the National Stock Exchange and BSE combined at 1530 IST, marginally down from INR 64.31 billion at the same time Wednesday. Papers issued by Vivriti Capital, Earlysalary Services Pvt. Ltd., REC Ltd., Vedika Credit Capital, Indian Railways Finance Corp., Krazybee Services, Shri Ram Finance Corp., Akara Capital Advisors, Keertana Finserv, The Andhra Pradesh Mineral Development Corp. Ltd., Muthoottu Mini Financiers, Muthoot Capital Services, Power Finance Corp., and UGRO Capital were traded the most on the exchanges Thursday.

In the primary market, issuances aggregating to INR 19.1 billion were scheduled for Thursday, up from INR 12.0 billion Wednesday. Tata Housing Development, Incred Financial Services, and Shriram Finance have invited bids to raise funds Friday. Issuances aggregating to INR 10.46 billion are scheduled for Friday.

Market participants are keenly waiting for the Monetary Policy Committee's decision on Friday. The market expects yields to fall by 2-3 basis points if the central bank announces a rate cut.  

Dealers said the market is divided on whether the RBI will cut its policy rate. A few market participants and experts expect a rate cut as they see the December meeting as the final chance to cut interest rates, while others expect status quo because of strong GDP data for the September quarter. The section of the market that does not see a rate cut on Friday expects dovish comments and a change in stance from neutral to accommodative.

UDAY BONDS

In the secondary market, five Ujwal DISCOM Assurance Yojana bonds aggregating to INR 74.00 million were traded, according to data on the RBI's Negotiated Dealing System-Order Matching system Thursday.

* INR 50.00 million of Rajasthan's 8.19%, 2026 bond was dealt at 6.0227%

* INR 9.20 million of Uttar Pradesh's 8.77%, 2031 bond was dealt at 7.1498%

* INR 7.00 million of Telangana's 7.96%, 2032 bond was dealt at 7.1399%

* INR 5.00 million of Telangana's 7.81%, 2027 bond was dealt at 6.4831%

* INR 2.80 million of Tamil Nadu's 7.75%, 2031 bond was dealt at 7.1573%

BENCHMARK LEVELS FOR CORPORATE BONDS

End

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

With inputs from Aaryan Khanna

Edited by Ashish Shirke

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