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Informist, Tuesday, Mar. 24, 2026

By Nandini Sinha, Meera Nair, and Vaishali Tyagi

MUMBAI/NEW DELHI – Yields on corporate bonds ended broadly steady Tuesday after moving in a narrow range during the day as traders avoided large bets amid uncertainty about the war in West Asia, dealers said.

"The volatile government bond yields left corporate bond traders in a confusion as the g-sec yield is at high level...can't predict anything these days," a fund manager at a mutual fund house said. "Right now, market is confused and nobody knows when these tensions will ease...therefore barely anybody is on buying side and willing to take risk, therefore whatever activity is happening it is one-sided (selling side)...which is pushing yields higher."

Yields on government bonds initially rose but eased towards the end of the session as hopes of a resolution to the conflict between the US and Iran led to a slight decline in Brent crude oil prices. The 10-year benchmark 6.48%, 2035 gilt closed at a yield of 6.8681%, up from 6.8379% the previous session. It touched a high of 6.8725% during the day.

Indicative yields on three-year bonds of the National Bank for Agriculture and Rural Development were broadly unchanged at 7.56-7.62% compared with 7.55-7.60% Monday, while those on five-year NABARD bonds were up at 7.58-7.65% from 7.54-7.56%. The yields on 10-year bonds rose to 7.64-7.70% from 7.60-7.66%.

In the early hours of trade, yields also rose due to continued selling by mutual funds to meet redemption demand, said dealers. Other investors, including insurance companies and banks, also sold bonds to manage portfolios ahead of the end of financial year 2025-26 (Apr-Mar), adding to the pressure on bonds. However, reports of Iran's supreme leader agreeing to negotiate with the US sparked hopes of de-escalation in the West Asia conflict which boosted market sentiment, dealers said. This led to some buying, with the rupee appreciating against the dollar and government bond prices rising. The rupee ended at 93.8650 a dollar against 93.9750 in the previous session.

Dealers said activity was concentrated in bonds maturing up to five years trading at 7.65%, driven primarily by mutual funds and banks. "Investors dumped corporate bonds and shifted to state development loans, which were offering around 7.40% yields. Since SDLs are more secure, investors favoured them," a dealer at a state-owned bank said. "Because of geopolitical uncertainty, investors are not tapping long-term issues. There is not much demand. It's mostly insurance companies investing in these segments."

In the secondary market, deals aggregating to INR 153.95 billion were recorded on the National Stock Exchange and BSE combined Tuesday, against INR 157.59 billion on Monday. Mutual funds were selling due to redemption pressure. Most banks and insurance companies were also on the selling side. A handful of pension funds were seen buying bonds. "There was not much buying in the corporate bond market today, except some PFs (pension funds)," a dealer at a state-owned bank said. "Instead there was a lot of selling pressure, primarily from mutual funds," said a dealer at a public sector bank.

Papers issued by Tata Motors Finance, IIFL Finance, Canara HSBC Life Insurance Co., Kerala Infrastructure Investment Fund Board, Bajaj Housing Finance, The Andhra Pradesh Mineral Development Corp., LIC Housing Finance, HDB Financial Services, NABARD, Power Finance Corp., and National Highways Authority of India were traded the most in the secondary market.

In the primary market, issuances fell significantly to INR 19.20 billion from INR 132 billion Monday. A few non-banking financial companies raised funds but the deals were not confirmed. On Wednesday, over INR 14 billion of bonds will hit the market. Trust Investment Advisors Pvt. Ltd. plans to raise up to INR 2 billion through reissuance of two bonds while NDR InvIT Trust has invited bids to raise INR 4.10 billion through five-year bonds, maturing on Mar. 15, 2031. Other issuers include Satin Finserv, Ugro Capital, and Renew Solar Energy Jharkhand Three.

Merchant bankers expect the corporate debt market to get a boost at the start of FY27, driven by mutual fund inflows. While Jan-Mar earnings might not be significantly impacted, prolonged West Asia conflict could affect first quarter earnings, leading companies to tap the corporate bond market for funds.

UDAY BONDS

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

* INR 1.40 million of Andhra Pradesh's 7.35%, 2029 bond was dealt at 7.1475%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Ashish Shirke

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