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Informist, Friday, Dec. 26, 2025

By Vaishali Tyagi

NEW DELHI - Trading volume in the secondary market of short-term debt fell significantly Friday due to muted participation ahead of the weekend, dealers said. The overall activity in the primary markets was also subdued as issuers stayed on the sidelines due to muted participation by mutual funds, the most active participants in the market, dealers said.

Dealers said a few mutual funds were there in the market and they were also trading in low quantum. With month-end redemption pressure, mutual funds had no funds, and therefore, activity in the secondary market was low. 

There were quite a few reasons for a quiet market today (Friday). First that, many traders were on leave due to the weekend and extended their holidays ahead of the New Year, a dealer at a brokerage firm said. "Another reason for low trading volume was quarter-end redemption pressure that kept mutual funds away from actively investing in the debt instrument."

Low liquidity in the banking system also pulled the short-term debt market volume down. The RBI's net liquidity injected into the banking system – a proxy for the liquidity deficit – was INR 810.65 billion Wednesday, the most since Sept. 23 and higher than INR 616.36 billion Tuesday.

Volume in the secondary market for CDs was lower than the previous day, but rates remained unchanged as demand was met adequately by sellers. The volume of CD transactions fell to INR 38.05 billion compared to Wednesday's volume of INR 55.40 billion. Indicative rates on three-month CDs were at 6.03-6.07% Friday, unchanged from Wednesday. Rates on six-month and one-year CDs were 6.40-6.47% and 6.60–6.67%, respectively. Money markets were shut on Thursday due to Christmas. Dealers said there were no major CDs reported in primary market compared to INR 46.50 billion on Wednesday.

In the secondary market, commercial paper trading volume slumped to INR 6.27 billion from INR 23.40 billion on Wednesday. Dealers said low volume in CP trading kept rates unchanged. Even in primary market, fundraising through CPs was dull as no major company was seen issuing papers compared to INR 4.25 billion Wednesday, dealers said. Most companies stayed on the sidelines, expecting rates to fall in the near term. 

Borrowing costs on the three-month CPs issued by non-banking financial companies were at 6.45-6.60% Friday, unchanged from Wednesday, while indicative rates on three-month paper issued by manufacturing companies were at 6.05-6.15% Friday. 

--Secondary market

* Punjab and Sind's CD maturing Monday was traded twice at a weighted average yield of 5.3192%

* ICICI Securities' CP maturing Monday was traded twice at a weighted average yield of 6.4189%

Following were the volumes, in INR billion, in the secondary market for short-term debt at 1700 IST, as detailed by the Clearing Corp. of India's F-TRAC platform:

End

Edited by Vandana Hingorani

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