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Informist, Tuesday, May 5, 2026

 

By Nandini Sinha

 

MUMBAI – Rates on certificates of deposit and commercial papers remained elevated Tuesday, as market sentiment was dampened by high crude oil prices and escalating tensions between the US and Iran, dealers said.

 

The US military said it had destroyed six Iranian ships in the Strait of Hormuz. This was after news reports Monday that Iran had fired missiles at a US warship. At 1801 IST, Brent crude oil futures for July delivery traded at $111.88 per barrel. The fall in the rupee also impacted investors' appetite. The rupee settled at 95.2800 a dollar Tuesday.

 

"Nothing positive is happening. Crude oil prices are high, G-sec (government securities' yields) are high, sentiments have an impact across the curve," a dealer at a private sector bank said. "The rates should have eased at the beginning of the month, but that hasn't happened. The shorter-tenor papers are seeing more pressure due to uncertainty over the ceasefire between the US and Iran," the dealer said.  

 

In the secondary market, rates on three-month CDs were at 6.45-6.55% Tuesday, up 5 basis points from 6.40-6.50% Monday, while those on six-month CDs were 6.95-7.05%, a tad below 6.97-7.07% Monday. The rates on one-year CDs were at 7.35-7.45% Tuesday, slightly higher than in the previous trading session.

 

Three-month commercial papers issued by non-banking finance companies were traded at 6.95-7.05%, up from 6.85-6.95% Monday, dealers from banks and broking firms said. Rates on six-month CPs were at 7.30-7.40% as compared to 7.25-7.35% Monday, while one-year CPs were traded at around 7.60-7.65%, higher than 7.50-7.60% Monday. 

 

The volume of trade in CDs and CPs rose sharply in the secondary market Tuesday compared to Monday. The volume of CDs rose to INR 146.20 billion from INR 48.55 billion Monday. The volume of trade in CPs rose to INR 85.35 billion from INR 29.40 billion the previous day. Mutual funds were buying mainly six-month papers, dealers said. 

 

"There were a lot of papers maturing on May 6. Those papers saw a lot of buying and selling. So, the volumes were high," said the dealer quoted earlier. "Those whose limits were full in CDs, they were investing in CPs," the dealer added.

 

Union Bank of India and IndusInd Bank issued three-month CDs in the primary market Tuesday, according to data from the Clearing Corp. of India Ltd. Union Bank of India raised INR 8.5 billion at 6.40%, while IndusInd Bank raised INR 3 billion at 6.80%. 

 

National Bank for Agriculture and Rural Development and Bajaj Housing Finance Ltd. were among those that issued commercial papers in the primary market. NABARD raised INR 3 billion at 6.55%, while Bajaj Housing Finance raised INR 10 billion at 6.60% through a three-month CP. 

 

--Primary market
* Union Bank of India and IndusInd Bank raised funds via CDs

* NABARD and Bajaj Housing Finance were among those that raised funds via CPs

 

--Secondary market

* IDBI Bank Ltd.'s CD maturing on Wednesday was traded twice at a weighted average yield of 5.1472%
* Mahindra and Mahindra Financial Services Ltd.'s CP maturing Wednesday was traded thrice at a weighted average yield of 5.1208%

 

Following were the volumes, in INR billion, in the secondary market for short-term debt at 1700 IST, as detailed by Clearing Corp. of India's F-TRAC platform:

 

Certificates of deposit		Commercial paper
Tuesday	Monday	Tuesday	Monday
146.20	48.55	85.35	29.40

 

End

 

Edited by Avishek Dutta

 

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