India Corporate Bonds
Yields steady for lack of cues; most MFs seen buying
This story was originally published at 19:51 IST on 17 March 2026
Register to read our real-time news.Informist, Tuesday, Mar. 17, 2026
By J. Navya Sruthi
MUMBAI – Yields on corporate bonds were steady Tuesday due to lack of fresh cues, dealers said. Most mutual funds were buying while state-owned banks were seen selling corporate bonds, dealers said. A few mutual funds were seen selling corporate bonds due to redemption pressure, dealers said.
"Mostly we have seen FPIs (foreign portfolio investors) selling and mutual funds buying today," a senior dealer at a private sector bank said. Although mutual funds are facing redemption pressure from companies and banks to pay for goods and services tax and advance tax, they are buying due to fund specific requirements, the dealer said.
Dealers said market sentiment was positive after the seven-day variable rate repo auction by the Reserve Bank of India. "The purpose of it was more psychological and to bring a positive market sentiment," the senior dealer said.
A few dealers also said that mutual funds were selling due to redemption pressure from corporate and banks to pay GST. Dealers said outflows for GST payments started Tuesday as markets are shut on Thursday and Saturday. "We have only two working days left this week, we can see small amount of GST payments today (Tuesday) as well," a dealer at a state-owned bank said.
According to market sources, INR 1.7 trillion to INR 2.0 trillion of outflows are expected this week from the banking system towards GST payment. The RBI conducted a seven-day VRR Tuesday to infuse liquidity as the surplus in the banking system Monday was INR 754.86 billion, the lowest since Jan. 28. However, participation in the auction was poor, and the RBI took all bids worth INR 480.14 billion at the auction at 5.26% while the notified amount was INR 1.5 trillion.
Most dealers expect the RBI to announce another variable rate repo in the coming days given the tax outflows. A dealer at a private sector bank said the RBI may announce a VRR of INR 500 billion to INR 1 trillion.
Going ahead, dealers expect yields to remain volatile due to ongoing tensions in West Asia. This volatility is expected keep banks away from raising funds. "Banks are awaiting clarity on the geopolitical situation, the prices of crude oil and on the liquidity situation," a dealer at another state-owned bank said.
On Tuesday, deals aggregating to INR 145.06 billion were recorded on the National Stock Exchange and BSE combined in the secondary market, up from INR 108.71 billion at the same time Monday.
Papers issued by Edelweiss Financial Services, UGRO Capital, Namra Finance, Trent, Navi Finserv, Cholamandalam Investment and Finance, Motilal Oswal Financial Services, National Bank for Agriculture and Rural Development, Bajaj Finance, The Andhra Pradesh Mineral Development Corp., IFL Finance, Telangana State Industrial Infrastructure Corp., India Infrastructure Finance, and Small Industries Development Bank of India were traded the most in the secondary market.
In the primary market, State Bank of India raised INR 60.51 billion through 10-year Basel-III-compliant additional tier-II bonds maturing on Mar. 20, 2036, dealers said. The state-owned bank set a coupon of 7.05% on the bonds. On Friday, Union Bank of India is planning to raise up to INR 75 billion through 10-year bonds.
None of the Ujwal DISCOM Assurance Yojana bonds were traded Tuesday in the secondary market, according to data on the RBI's Negotiated Dealing System-Order Matching system.
BENCHMARK LEVELS FOR CORPORATE BONDS:
Tenure | Tuesday | Monday |
Three-year | 7.40-7.43% | 7.40-7.44% |
Five-year | 7.48-7.50% | 7.45-7.50% |
10-year | 7.55-7.58% | 7.50-7.55% |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
With inputs from Nandini Sinha and Meera Nair
Edited by Ashish Shirke
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