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Informist, Tuesday, Feb. 3, 2026

By Vaishali Tyagi

NEW DELHI – Corporate bond yields slumped in the secondary market Tuesday, driven by improved sentiment in money markets after India and the US announced a long-awaited trade deal, dealer said. The deal reduced US tariffs on Indian goods, boosting investors' confidence, they said. Yields on corporate bonds also ended lower following the fall in government bond yields tracking a rise in the rupee as traders appreciated the move of a trade deal between the US and India, market participants said. The 10-year benchmark 6.48%, 2035 gilt yield closed at 6.72%, down from 6.77% the previous day. 

Trump late Monday said India and the US have concluded the much-awaited trade deal under which Washington will cut reciprocal tariffs on Indian goods to 18% from 25%. The US had imposed 50% tariff on Indian goods in August--a 25% reciprocal tariff and 25% punitive tariff. While Trump did not clarify whether he had scrapped the punitive tariffs imposed on New Delhi for its trade and strategic relations with Russia, Prime Minister Narendra Modi said in a post on X that Indian goods would attract 18% tariffs in the US.  

"Market sentiment improved on positive trade deal news, boosting prices and lowering yields," a dealer at a state-owned company said. "FIIs (foreign instituional invetsors) had been pulling out funds, but the US-India deal has changed the narrative."

Dealers expect a surge in primary market bond issuances in coming weeks, which could impact secondary market yields. "Earlier, traders expected borrowing to rise in January as yields were lower, but a sudden spike in yields pushed issuers away. However, now we expect issuances to pick up," the dealer quoted above said, adding that the market was also facing liquidity crunch in January which added to the rise in yields due to subdued participation.

Further, activity picked up as systemic liquidity rose sharply above the INR 1 trillion, dealers said. In the secondary market, a few mutual fund and insurance companies were seen buying bonds across maturities agressively, while a handful of mutual funds sold bonds. Pension funds, banks, and corporates also bought papers. Volume in the secondary market on the National Stock Exchange and BSE combined was INR 146.22 billion Tuesday, significantly higher from 70.38 billion Monday.

Bonds issued by HDB Financial Services, REC, NTPC, Power Finance Corp., MAS Financial Services, Sundaram Finance, UGRO Capital, Samunnati Finance, Muthoot FinCorp., National Bank For Agriculture And Rural Development, Small Industries Development Bank of India, Cholamandalam Investment And Fin. Co., Satin Creditcare Network, and Andhra Pradesh State Beverages Corp. were traded the most.

Primary market activity remained dull Tuesday. Even on Wednesday activity is expected to be muted at INR 7 billion, with dealers expect activity in the primary market to remain subdued ahead of the meeting of the RBI's Monetary Policy Committee outcome this week.

UDAY BONDS

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

* INR 100.00 million of Uttar Pradesh's 8.44%, 2029 bond was dealt at 6.6057%

* INR 50.00 million of Uttar Pradesh's 8.63%, 2029 bond was dealt at 6.6164%

BENCHMARK LEVELS FOR CORPORATE BONDS

With inputs from J. Navya Sruthi

Edited by Akul Nishant Akhoury

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