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Informist, Thursday, Dec. 18, 2025

 

By Vaishali Tyagi

 

MUMBAI – Yields on corporate bonds ended steady in the secondary market Thursday with selling by mutual funds offset by purchases by banks and some other mutual funds, dealers said. Most mutual funds sold bonds to meet the pressure from redemptions ahead of the end of the December quarter. Some others deployed their excess cash to buy bonds, keeping yields unchanged, the dealers said.

 

As per the dealers, there is no buying sentiment in the market because of a shortage of cash, but a few traders with reserves of liquidity saw an opportunity and bought corporate bonds as yields were slightly on the higher side. Secondary market activity remained hectic throughout the day, as evidenced by the volumes, they said.

 

"Liquidity is out of the market, therefore buying sentiment has also faded," said a dealer at a broking firm. "We can say switch is happening as most mutual funds are selling one bond and buying another. Therefore we are seeing (portfolio) churning these days. Some traders are on the back foot as there is no cue on the basis of which they can take fresh bets." The RBI's net injection into the banking system--a proxy for the liquidity deficit--was INR 685.86 billion Wednesday, the highest since Oct. 20. The RBI's net injection Tuesday was INR 607.88 billion.

 

Dealers said yield movement happens on days when aggressive buying or selling is seen, based on some triggers or tracking the government bond market. "Today's (Thursday's) selling did not push yields higher as there was some buying too," according to the dealer.

 

Deals aggregating to INR 128.23 billion were recorded on the National Stock Exchange and BSE combined Thursday, up from INR 104.49 billion Wednesday. Mutual funds and a handful of banks were active on both the buying and selling sides across tenures. A handful of insurance companies were also active on the buying side, but pension funds were absent, dealers said.

 

Paper issued by Telangana State Industrial Infrastructure Corp., Navi Finserv, Capri Global Capital, National Bank For Agriculture and Rural Development, Andhra Pradesh State Beverages Corp., Muthoot Fincorp, Muthoottu Mini Financiers, IIFL Samasta Finance, Moneyboxx Finance, and UGRO Capital were traded the most on the bourses. 

 

In the primary market, companies issued bonds worth over INR 43.21 billion, up sharply from INR 4.18 billion Wednesday. Friday, issuances aggregating to INR 12.95 billion are scheduled. Muthoot Finance has invited bids to raise INR 8 billion by issuing bonds maturing in December 2028. Urjah Metallics will raise INR 3.5 billion by issuing bonds maturing on Dec. 21, 2030. Shri Ram Finance Corp., Akara Capital Advisors, and Avanti Finance will also raise funds Friday.

 

Merchant bankers believe the secondary market will remain range-bound in the near term and primary market activity will pick up only in January once rates stabilise. Some non-banking finance companies are opting for short-term debt instruments to raise funds while others are waiting for rates to fall. Issuances are expected to pick up if borrowing rates decline or yields stabilise.

 

"Once the rates stabilise and start cooling off a bit, we will see market picking up," a fund manager at a big mutual fund house said. "No urgency from issuers is seen and investors are also pausing. Demand will come back in the last week of December or post December. It is a long holiday season for Christmas and New Year. Flows will be back in early January."

 

UDAY BONDS

In the secondary market, one Ujwal DISCOM Assurance Yojana bond of INR 3.00 million was traded, according to data on the RBI's Negotiated Dealing System-Order Matching system.

 

* INR 3.00 million of Uttar Pradesh's 8.35%, 2029 bond was dealt at a weighted average yield of 6.6126%

 

BENCHMARK LEVELS FOR CORPORATE BONDS

Tenure	Thursday	Wednesday
Three-year	6.90-6.92%	6.90-6.93%
Five-year	6.98-7.03%	6.98-7.02%
10-year	7.26-7.28%	7.25-7.27%

 

End

 

With inputs from Shubham Rana

Edited by Rajeev Pai

 

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