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Informist, Wednesday, Jan. 21, 2026

By Vaishali Tyagi

MUMBAI – On continous selling by mutual funds due to low cash with MFs and tight liquidity in the banking system, yields on corporate bonds across tenures rose further slightly on fifth day, dealers said. However, the rise in yields was limited due to some buying by a few mutual funds, they said.

Mutual funds are not actively investing due to low inflows and liquidity concern, adding to the pressure on yields. With bond yields higher, a few traders are opting for other short-term debt instruments--commercial paper and certificate of deposits--as a convenient alternative as a result, bond yields are remaining higher. The net liquidity absorbed from the banking system by the RBI --a proxy for the liquidity surplus--was INR 721.31 billion Tuesday, down from INR 818.62 billion Monday. 

"There was still selling by mutual funds due to low cash with them as they received less inflows compared to what they expected, and other few investors which led to rise," a dealer at a brokerage firm said. "But there was some buying also seen which limited the rise in yields."

In the secondary market, participants from different segments were seen selling actively, while some buying was also seen in limited volume. Mutual funds, insurance companies and banks were seen actively selling bonds across tenures. A few mutual funds were also seen buying, dealers said. Pension funds were also seen selling in longer tenure bonds, but in low volume, dealers said. On Wednesday, volume in the secondary market was at INR 130.93 billion on the National Stock Exchange and BSE combined, compared with INR 129.11 billion Tuesday. 

Bonds issued by L&T Finance, HDFC Credila Financial Services, Mahindra & Mahindra Financial Services, Cholamandalam Investment and Finance Co., Earlysalary Services, Keertana Finserv, Power Finance Corp., National Bank for Agriculture and Rural Development, and SMFG India Home Finance Co. were traded the most on exchanges Wednesday.

Activity in the primary market rose significantly Wednesday, with volumne surging to over INR 60 billion from INR 29 billion Tuesday. Dealers said bond issuances are expected to pick up going forward, especially by banks. On Wednesday, activity is expected to rise to INR 105.15 billion. Indian Overseas Bank plans to raise up to INR 10 billion through Basel-III-compliant additional tier-II bonds maturing in 10 years. ESAF Small Finance Bank plans to raise up to INR 1.5 billion by issuing tier II bonds maturing on Feb. 23, 2032. 

Other issuers, including Coimbatore City Municipal Corp., SMFG India Home Finance, Cholamandalam Investment and Finance, and Indel Money, have invited bids to raise funds from the corporate debt market. "There is significant rise in primary market, some banks are tapping and other non-banking financial companies are also expected to tap soon," a dealer at another brokerage firm said. Market participants are keeping a close eye on primary market activity as it is expected to pick up in Oct-Dec, expecially bond issuances from banks are eyed. 

UDAY BONDS

In the secondary market, three Ujwal DISCOM Assurance Yojana bonds worth INR 27.60 million was traded Wednesday, according to data on the RBI's Negotiated Dealing System-Order Matching system.

* INR 20.50 million of Uttar Pradesh's 8.63%, 2029 bond was dealt at 6.70828%.

* INR 6.00 million of Bihar's 8.45%, 2027 bond was dealt at 6.8857%.

* INR 1.10 million of Tamil Nadu's 7.75%, 2032 bond was dealt at 7.3345%.

BENCHMARK LEVELS FOR CORPORATE BONDS

End

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

Edited by Akul Nishant Akhoury

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