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Informist, Monday, Jan. 5, 2026

 

By J. Navya Sruthi

 

MUMBAI – Secondary market volumes for certificates of deposit more than doubled from the previous day, while commercial paper volumes also surged as mutual funds actively churned their portfolios, dealers said. However, there was no CD fundraising in the primary market Monday due to low investor participation.

 

"Rates (in the secondary market) on Jan, Mar papers (papers maturing in January and March) were up today (Monday) morning, till 1230 IST, as a few mutual funds were selling, but later in the second half, there was more buying in March papers, which brought down rates (yields). Specifically, two to three mutual funds were buying today as they must have received some inflows (through SIPs)," a dealer at a state-owned bank said.

 

This continuous activity in the secondary market led to higher volumes. The secondary market volume in the CD market was INR 110.75 billion Monday, significantly higher than INR 47.40 billion Friday. Similarly, volume in the CP market was INR 20.95 billion Monday, higher than INR 12.50 billion Friday.

 

There were only two companies which issued CPs in the primary market Monday. Reliance Retail Ventures Ltd. raised INR 14 billion at 6% through CPs maturing in March and Kotak Mahindra Prime Ltd. raised INR 3.5 billion at 7.05% through one-year CPs.

 

The three-month CD was lower at 5.90-6.00% Monday from 6.02-6.05% the previous trading day as mutual funds bought papers maturing in March. "There must be inflows for mutual funds which led to front-loading in this segment (three-months CD)," a dealer at a private sector bank said. 

 

However, rates on the six-month and one-year CDs were largely similar from the previous day at 6.40-6.45% and 6.65-6.70%, respectively. Rates on three-month CPs issued by manufacturing and non-banking finance companies were also largely unchanged from the previous day at 6.05-6.07% and 6.46%, respectively.   

 

Overall, there was negative sentiment across all tenures in the debt market due to larger-than-expected state borrowing scheduled in the March quarter, dealers said. The Reserve Bank of India Friday said that the state and union territory governments are expected to raise nearly INR 5 trillion in the March quarter, against the market's estimate of INR 4.5 trillion to INR 5 trillion.

 

But the improvement in systemic liquidity surplus is likely to weigh on rates and increase investor participation in primary and secondary markets. The overall liquidity available in the banking system Sunday was in a surplus of INR 940 billion, which also includes the excess cash balances with the RBI. The systemic liquidity surplus will continue to improve due to the central bank's liquidity injection measures, which will also support volume and issuances of short-term debt papers in the coming days.

 

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:

 

Certificates of deposit		Commercial paper
Monday	Friday	Monday	Friday
110.75	47.40	20.95	12.50

 

End

 

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

 

Edited by Tanima Banerjee

 

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