India Corporate Bonds
Yields slightly up tracking gilts' rise, rupee fall
This story was originally published at 21:01 IST on 30 March 2026
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By Nandini Sinha
MUMBAI – Yields in the corporate bond market rose marginally Monday due to weak investor sentiment caused by the ongoing war in west Asia, the rise in yields on government bonds, and the fall of the rupee to a record low, dealers said. Bonds maturing in up to three years were traded the most, dealers added.
"There was almost no buying in the corporate bond market. Mutual funds sold bonds due to redemption pressures in the year-end", a dealer at a private sector bank said. "Even papers that gained in the morning saw a fall in rates tracking the fall in the rupee and the rise in the yields on the government bonds," according to a fund manager at a mutual fund. The yield on the 10-year benchmark 6.48%, 2035 bond crossed the key 7.00% level Monday.
Indicative yields on three-year bonds of the National Bank for Agriculture and Rural Development rose to 7.58-7.66%, almost unchanged from 7.59-7.64% Friday, while those on five-year NABARD bonds were 7.69-7.70%, up from 7.61-7.67%. The yields on 10-year NABARD bonds fell to 7.72-7.75% from 7.73-7.76%. While yields on five year bonds were a tad up from Friday, rates on 10-year bonds were slightly down due to lack of volume in the segment.
At 1500 IST, deals aggregating INR 94.61 billion were recorded in the secondary market on the National Stock Exchange and BSE combined Monday, significantly lower from INR 111.97 billion Friday.
Papers issued by Edelweiss Financial Services Ltd., IIFL Finance Ltd., National Bank For Agriculture And Rural Development, Small Industries Development Bank of India, Bajaj Housing Finance Ltd., LIC Housing Finance Ltd., HDFC Bank Ltd., and Punjab National Bank were traded the most.
In the primary market, bond issuances fell to INR 53 billion Monday from INR 63.20 billion Friday. Vardhman Polytex Ltd. plans to raise up to INR 750 million Thursday through bonds maturing on Mar. 31, 2031.
"Corporate bond volumes will be lower (in the near future) because MFs (mutual funds) are not buying currently as the redemption pressure continues. Lately, it was PSUs (public sector undertakings) and foreign banks on the buying side. Liquidity levels are low as it's year-end and should get better in the coming financial year", a dealer at a private sector bank said.
Dealers expect the earnings of companies to take a hit in the first quarter of 2026-27 (Apr-Mar) due to the ongoing war. In such a situation, in Apr-Jun, companies would prioritise securing their supply chains over raising capital expenditure due to the supply disruptions caused by the war, a dealer said. "Companies would do more fundraising in the Jul-Sept quarter," the dealer said.
"The outlook for rates in the corporate bond market in the first quarter of FY27 will depend on the market sentiment," a dealer said but did not provide an estimate. "It will depend on the liquidity in the system, the price of crude oil, yields on government bonds as well as on the position of the rupee against the dollar."
"Everything depends on investors' sentiments which are weaker these days, and it is expected to be better only if any positive news comes from the war in west Asia," the fund manager said. Dealers will keep a close eye on the rupee, crude oil prices, and the movement in the gilts market, which corporate bond yields track, the fund manager said.
No major selling was seen in the corporate bond market Monday despite the fall of the rupee to a record low but some selling was seen from a few foreign banks that exited some maturities.
UDAY BONDS
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In the secondary market, one Ujwal DISCOM Assurance Yojana bond worth INR 100 million was traded Monday, 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 6.9360%
BENCHMARK LEVELS FOR CORPORATE BONDS:
Tenure | Monday | Friday |
Three-year | 7.58-7.66% | 7.59-7.64% |
Five-year | 7.69-7.70% | 7.61-7.67% |
10-year | 7.72-7.75% | 7.73-7.76% |
End
US$1 = INR 94.83
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
With inputs from Vaishali Tyagi, Meera Nair
Edited by Deepshikha Bhardwaj
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