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Informist, Tuesday, Jan. 13, 2026

By Vaishali Tyagi

MUMBAI – Yields on corporate bonds ended higher by three to four basis points across tenures in the secondary market Tuesday, tracking a rise in government bond yields, dealers said. Continued selling amid tight liquidity in the banking system further supported the rise in yields, they said. 

Government bond yields rose after Bloomberg Index Services delayed the inclusion of India's fully accessible route bonds in its flagship Global Aggregate Index. The index service provider said it would continue to review Indian bonds and that the next update on their inclusion in the index would be in mid-2026. Bond traders were expecting the index provider to announce the inclusion this week.

"Corporate bond yields were down in early trade Tuesday as traders bought bonds based on their requirement and yields were likely to go down," a dealer at a brokerage firm said. "But, yields rose tracking g-sec (government securities) after news that Bloomberg has delayed the inclusion of Indian (fully accessible route) bonds, which filled the market with negative sentiment." A dealer at another brokerage firm said that market sentiment turned negative following the news, triggering widespread selling.

Market participants said activity is limited, with traders low on cash due to tight liquidity and most mutual funds selling. The net liquidity absorbed from the banking system by the RBI--a proxy for the liquidity surplus--was INR 164.11 billion Monday, down from INR 298.72 billion Sunday. Payment of INR 290 billion for gilts purchased at the gilt auction Friday drained liquidity Monday.

Merchant bankers expect investment activity to revive once liquidity improves, with mutual funds and other investors likely to deploy cash. Portfolio churning is also expected to gain traction, likely boosting trading volumes.

In the secondary market, mutual funds were seen actively selling bonds across tenures. A handful of banks and insurance companies were seen buying and selling at very low volumes, while pension funds were largely absent from the market, dealers said. At 1500 IST, volume in the secondary market was at INR 30.57 billion on the National Stock Exchange and BSE combined, slightly higher than 24.74 billion Monday. 

Bonds issued by Canara Bank, Punjab National Bank, Andhra Pradesh State Beverages Corp., Muthoottu Mini Financiers, Vedika Credit Capital, National Bank for Agriculture and Rural Development, Chaitanya India Fin Credit, Indiabulls Commercial Credit, and Small Industries Development Bank of India were traded the most on exchanges.

Activity in the primary market remained dull Tuesday. Issuances totalling INR 9.80 billion were scheduled, significantly down from Monday's INR 80.85 billion. On Wednesday, issuances aggregating INR 7.24 billion are scheduled. Muthoot Finance has invited bids to raise up to INR 3 billion via 10-year bonds, while Sammaan Capital will issue 10-year bonds to raise up to INR 2 billion. Electonica Finance and Vedika Credit Capital will also tap the debt market to raise funds.

UDAY BONDS

In the secondary market, two Ujwal DISCOM Assurance Yojana bonds worth INR 19.50 million were traded Tuesday, according to data on the RBI's Negotiated Dealing System-Order Matching system.

* INR 7.00 million of Rajasthan's 8.21%, 2026 bond was dealt at a weighted average yield of 7.6546%

* INR 6.50 million of Rajasthan's 8.19%, 2026 bond was dealt at a weighted average yield of 7.6260%

* INR 6.00 million of Bihar's 8.45%, 2027 bond was dealt at a weighted average yield of 7.6408%

BENCHMARK LEVELS FOR CORPORATE BONDS

End

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

Edited by Saji George Titus

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