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Informist, Thursday, Feb. 5, 2026

By Vaishali Tyagi

NEW DELHI – Yields on corporate bonds ended lower in the secondary market Thursday as mutual funds and banks bought bonds due to ample liquidity in the banking system. However, a few traders avoided large bets due to caution ahead of the outcome of the Reserve Bank of India's Monetary Policy Committee meeting Friday, dealers said. Yields are likely to remain in a tight range till the policy outcome, they said.

"Activity was there and most participants bought today (Thursday) due to excess cash with them but a few traders were on backfoot also and avoided large bets ahead of RBI meeting decision," a dealer at a brokerage firm said.

Dealers said big mutual funds are holding back ahead of the policy meeting, keeping traders quiet. Market participants expect no rate cut, but are waiting for guidance on liquidity and the RBI's tone on growth and inflation projections. 

Dealers expect a surge in primary market bond issuances post-RBI policy outcome, which could impact secondary yields. "Now, we expect issuances to pick up post-policy meet," a dealer said. The net liquidity absorbed from the banking system by the RBI--a proxy for the liquidity surplus--fell to INR 1.96 trillion Wednesday from INR 2.17 trillion Tuesday. The slight fall in liquidity was on account of payment for state bonds auctioned by the RBI on Tuesday, dealers said.

In the secondary market, mutual funds and banks were seen buying across maturities aggressively. Insurance companies and corporates also traded in papers. Volume in the secondary market on the National Stock Exchange and BSE combined was INR 117.56 billion slightly down from INR 149.50 billion Wednesday.

Bonds issued by HDB Financial Services, Axis Finance, Andhra Pradesh State Beverages Corp., Kerala Infrastructure Investment Fund Board, Aditya Birla Housing Finance, The Andhra Pradesh Mineral Development Corp., Export-Import Bank of India, Spandana Sphoorty Financial, and Godrej Industries were traded the most.

In the primary market, participation from issuers rose Thursday. NABKISAN Finance Thursday raised INR 5 billon at a coupon of 7.80% on 10-year tier-II bonds maturing on Feb. 6, 2036. However on policy day, activity is expected to remain limited as single bond issuance of Knowledge Realty Trust is scheduled. The company plans to raise up to INR 10 billion through three-year three-month bonds maturing on May 8, 2029.

NABARD is likely to raise up to INR 70 billion through three bonds next week, an official told Informist. Given softening of yields so far this week, NABARD now expects the coupon on its upcoming issuance next week around 7%, according to the official at the state-owned company.

There were no Ujwal DISCOM Assurance Yojana bonds traded Thursday in the secondary market, according to data on the RBI's Negotiated Dealing System-Order Matching system.

BENCHMARK LEVELS FOR CORPORATE BONDS

End

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

With inputs from J. Navya Sruthi

Edited by Akul Nishant Akhoury

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