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Informist, Tuesday, Jan. 20, 2026

By Vaishali Tyagi

NEW DELHI – Yields on corporate bonds rose across tenures for the fourth day in a row as mutual funds continued to sell, dealers said. Most other participants, including insurance companies, banks and pension funds, also sold bonds Tuesday due to tight liquidity in the banking system.

"Mutual funds and other investors continued selling bonds as yields rose, with traders offloading earlier purchases made at lower yields," a dealer at a brokerage firm said.

"They are not buying as of now, expecting higher yields to stick around. Therefore, either selling is happening or people are holding back," another dealer at a brokerage firm said. "Tight liquidity in the banking system is also pushing yields up."

The net liquidity absorbed from the banking system by the Reserve Bank of India – a proxy for liquidity surplus – was INR 818.62 billion, down from INR 1.23 trillion Sunday. A few call dealers expect that systemic liquidity may fall to a deficit by Wednesday due to pressure from goods and services tax outflows. The market expects INR 1.5 trillion to INR 1.8 trillion outflows for GST payments. 

Corporate bond yields have risen due to weak sentiment, and macro concerns like government borrowing and pressure on the rupee. Dealers attribute the uptick to these factors, expecting yields to stay high. However, a rise in corporate bond yields was capped as government bond yields fell towards the end of trade as traders speculated the RBI bought gilts in the secondary market, dealers said. Expectation of another announcement of an open market operation auction also aided gilt prices as traders covered some short sales before the close. Yield on the 10-year benchmark 6.48%, 2035 gilt closed at 6.67%, lower than 6.68% Monday. Bond prices had erased sharp gains from earlier in the day after the five-year overnight indexed swap rate hit a fresh 11-month high tracking a sharp rise in the 10-year US Treasury yield.

In the secondary market, participants from different segments were seen selling actively. Mutual funds, insurance companies and banks were seen actively selling bonds across tenures. Pension funds were also seen selling in longer tenure bonds, but in low volume, dealers said. On Tuesday, volume in the secondary market was at INR 129.11 billion on the National Stock Exchange and BSE combined, marginally higher than INR 124.46 billion Monday. 

Bonds issued by Satin Housing Finance, ICICI Home Finance Co., Earlysalary Services, Power Finance Corp., UGRO Capital, IIFL Finance, National Bank for Agriculture and Rural Development, REC and Keertana Finserv were traded the most on exchanges Tuesday.

Activity in the primary market rose significantly Tuesday, with volumne surging to over INR 29 billion from INR 3.75 billion Monday. Dealers said bond issuances are expected to pick up going forward, especially by banks. On Wednesday, activity is expected to nearly double to INR 57 billion. Bajaj Housing Finance plans to raise up to INR 25 billion by issuing bonds maturing in three years, while GMR Hyderabad International Airport will tap the market to raise INR 21 billion through 15-year bonds maturing on Jan. 22, 2041. Other issuers include 360 ONE Prime and IndoStar Capital Finance, which have invited bids to raise funds from the corporate debt market. Traders are keeping a close eye on primary market activity as it is expected to pick up in Oct-Dec.

UDAY BONDS

In the secondary market, one Ujwal DISCOM Assurance Yojana bonds worth INR 250 million was traded Tuesday, according to data on the RBI's Negotiated Dealing System-Order Matching system.

* INR 250.00 million of Uttar Pradesh's 8.66%, 2027 bond was dealt at 6.5400%.

BENCHMARK LEVELS FOR CORPORATE BONDS

End

With inputs from Aaryan Khanna

Edited by Tanima Banerjee

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