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Informist, Tuesday, Jan. 27, 2026

NEW DELHI/MUMBAI – Yields on corporate bonds ended higher by 2-3 basis points across tenures in the secondary market Tuesday, tracking a rise in government bond yields, dealers said. Traders from different segments sold bonds amid the tight liquidity in the banking system which further supported the rise in yields, they said. The net liquidity absorbed from the banking system by the Reserve Bank of India -- a proxy for the liquidity surplus -- was INR 569.87 billion Monday, similar to Saturday and Sunday but down from INR 636.49 billion Friday.

Yield on benchmark 10-year government bond rose above the psychologically crucial level of 6.70%, the highest so far this financial year. The yield hit 6.7140% Tuesday, the highest since Mar. 5, as traders hit stop-losses when the 10-year yield rose above 6.70%, dealers said. Earlier in the day, gilt yields rose sharply as traders made room for fresh supply at the state bond auction Tuesday and weekly gilt auction Friday.

Dealers also said that there was lack of buying interest as there were no positives to look forward to before the Union Budget for 2026-27 (Apr-Mar) on Sunday. "There are no positive signs as of now. Market participants are keeping a close eye on the Budget, which may set some direction for the markets," a dealer at a brokerage firm said.

Merchant bankers expect investment activity to pick up once liquidity improves and after the Budget. Mutual funds and other investors are likely to deploy cash, and portfolio churning is also expected to gain traction, boosting trade volumes.

"Corporate bond yields were given (down) today (Tuesday) as traders from different segments sold bonds tracking gilts and on expectation of increase in supply of corporate bonds in primary (market) to invest...they are expecting more PSUs (public sector undertakings) and banks to tap the market," the dealer quoted above said.  

Participants from different segments were seen trading in the secondary market. Most insurance companies and mutual funds were seen selling papers across tenures. A few other mutual funds and banks also sold bonds across tenures. Participation of pension funds and corporates was limited. They too sold, dealers said. Volume in the secondary market on the National Stock Exchange and BSE combined was INR 65.14 billion, lower from INR 84.76 billion Friday.

Bonds issued by Satin Housing Finance, Shriram Finance, Navi Finserv, Indel Money, UGRO Capital, Muthoot Capital Services, Earlysalary Services, Branch International Financial Services, Keertana Finserv, Muthoot Fincorp, Manba Finance, Oxyzo Financial Services, and Moneyboxx Finance were traded the most on the exchanges Tuesday.

Volume in the primary market fell significantly to nearly INR 22.65 billion on Tuesday from INR 140 billion Friday. Dealers expect primary market activity to remain mixed. "We are expecting some key issuers including a few banks and other PSUs to tap the bond market as this is the last quarter to raise funds," a dealer at another brokerage firm said.

On Wednesday, bond issuances worth INR 8 billion are lined up. Lloyds Metals and Energy plans to raise up to INR 6 billion by issuing five-year bonds. Vedika Credit Capital has invited bids to raise INR 1 billion by issuing May 2028 bond.

UDAY BONDS

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

* INR 3.00 million of Uttar Pradesh's 8.35%, 2029 bond was dealt at 6.6201%.

BENCHMARK LEVELS FOR CORPORATE BONDS

End

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

Edited by Ashish Shirke

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