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Informist, Tuesday, Jun. 23, 2026

By Vaishali Tyagi

NEW DELHI – The volume of transactions in certificates of deposit and commercial papers rose sharply in the secondary market Tuesday as mutual funds showed strong interest ahead of the June quarter end, dealers said. "With mutual funds adjusting portfolios ahead of the June quarter-end, they are churning their holdings aggressively," a dealer at a brokerage firm said. "They are also active in corporate bonds but are limiting exposure to ultra-short tenures to keep money in liquid schemes."

In the secondary market, CD trading volume rose to INR 138.10 billion Tuesday from INR 104.15 billion Monday, according to Clearing Corp. of India Ltd. data at 1720 IST. CP trading volume was at INR 86 billion Tuesday, significantly up from INR 57.05 billion Monday. Dealers expect volumes to pick up after this week or in early July. Market participants expect good and services tax outflows to be over by then and government spending at month-end to improve liquidity.

Banks and corporates stayed on sidelines due to tightness in the banking system's liquidity, dealers said. Liquidity in the banking system turned into deficit on Monday, for the first time since Mar. 22, post outflows for the payment for GST tax. The net liquidity injected in the banking system by the Reserve Bank of India--a proxy for the liquidity deficit--was INR 199.72 billion Monday, against net liquidity absorbed INR 306.85 billion Sunday. Liquidity in the banking systm is anticipated to stay tight until Jun. 29, with improvement likely only after government spending picks up at the month-end, which could infuse funds into the banking system, dealers said. 

Primary market CD issuances rose to INR 67.00 billion Tuesday from INR 18.50 billion on Monday, according to data from Clearing Corp. of India Ltd. Union Bank of India, Bank of Baroda, Federal Bank, Bank of India, and IDFC FIRST Bank tapped the market for funds Monday. Bank of Baroda raised INR 18 billion at a weighted average yield of 6.20% via 30-day CD, while Union Bank of India borrowed INR 16.75 billion through the issuance of two CD. IDFC FIST Bank raised INR 15 billion also through two CDs, while Federal Bank borrowed INR 7 billion through 29-day CD at a weighted average yield of 6.30%. 

On CP front, paper aggregating to INR 63.43 billion were issued Tuesday, significantly down from INR 146.77 billion Monday. Issuers included HDB Financial Services, Godrej Finance, ICICI Securites, Nuvama Wealth Finance, Export Import Bank of India, Cholamandalam Investment and Finance Co., PNB Housing Finance, and Godrej Properties, were the major issuers of CP Tuesday. EXIM Bank raised INR 30 billion via 91-day CP at a weighted average yields of 6.65%, while Nuvama Wealth Finance raises INR 3 billion at a weighted avergae yields of 90-day CP at 8.05%. 

Dealers said due to need-based deals and portfolio churning, the yields on short-term debt instruments remained broadly unchanged from Monday across tenures in the secondary market with little downward bias. Yields on three-month CDs were at 6.58-6.65% from Monday's 6.60-6.65% and those on six-month and one-year were steady at 6.64-6.68% and 7.14-7.23%, respectively, dealers said. Similarly, yields on three-month AAA-rated papers issued by non-banking financial companies were largely steady from the previous day at 6.86-6.92%. Yields on six-month and one-year commercial papers were steady at 7.50-7.55% and 7.65-7.70%, respectively.

--Primary market
* Union Bank of India, Bank of Baroda, Federal Bank, Bank of India, and IDFC FIRST Bank were the CD issuers. 

* HDB Financial Services, Godrej Finance, ICICI Securites, Nuvama Wealth Finance, Export Import Bank of India, Cholamandalam Investment and Finance Co., PNB Housing Finance, and Godrej Propertieswere the major issuers of CP Monday. 

--Secondary market

* AXIS Bank's CD maturing Wednesday was traded eight times at a weighted average yield of 5.33%
* NTPC's CP maturing Wednesday was traded eight times at a weighted average yield of 5.37%

The following were the volumes, in INR billion, in the secondary market for short-term debt at 1700 IST, as detailed on CCIL's F-TRAC platform:

End

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

Edited by Akul Nishant Akhoury

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