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Informist, Thursday, Jun. 25, 2026

 

By Vaishali Tyagi

 

NEW DELHI – Trading volume in the secondary market of short-term debt fell sharply Thursday due to weak participation ahead of the long weekend, dealers said. Only a few mutual funds were active, and even then in small amounts. Month-end redemption pressure left mutual funds short of funds, keeping their activity subdued, dealers said. "Due to the quarter-end, there was little surplus with investors to deploy and quarter-end redemption pressure also kept mutual funds away from actively investing in debt instruments," a dealer at a brokerage firm said. Money markets will be shut on Friday for Muharram.

 

A liquidity deficit in the banking system also kept trading volumes in the short-term debt market down. The net liquidity injected by the RBI into the banking system – a proxy for the systemic liquidity deficit – was INR 103.12 billion Wednesday. 

 

In the secondary market, CD trading volume fell significantly to INR 70.95 billion Thursday from INR 141.90 billion Wednesday, according to Clearing Corp. of India Ltd. data at 1810 IST. Yields on 'AAA'-rated three-month CDs were broadly unchanged at 6.56-6.60% Thursday, while those on six-month CDs were at 6.60-6.70%. Yields on one-year fell to 7.02-7.08% from 7.08-7.10%, dealers said. 

 

Similarly, fundraising through CDs in the primary market remained subdued. CD issuances fell to INR 45.50 billion Thursday from INR 78.25 billion Wednesday, according to data from Clearing Corp. Bank of Baroda, HDFC Bank, IDFC FIRST Bank, and Karur Vysya Bank tapped the market for funds Thursday. Bank of Baroda and IDFC FIRST Bank raised INR 15.50 billion and INR 10 billion, respectively, by issuing two CDs each. HDFC Bank borrowed INR 12.50 billion via a 24-day CD. Karur Vysya Bank borrowed INR 7.50 billion by issuing two CDs. 

 

Dealers said several other banks came to the market to raise funds through CDs, but some of these deals did not materialise as they did not get the rates they wanted. Some banks tapped the call money market to meet the month-end funding needs and support credit offtake. "Some banks used the call money market for funds to meet their disbursal needs ahead of the long weekend," a dealer at another brokerage firm said.

 

On the commercial paper side, trading volume fell to INR 46.25 billion Thursday from 55.60 billion Wednesday. Yields on three-month AAA-rated papers issued by non-banking financial companies fell marginally from the previous day to 6.82-6.85%. Yields on six-month and one-year commercial papers were steady at 7.48-7.53% and 7.63-7.68%, respectively.

 

Papers aggregating to INR 108.90 billion were issued Thursday, more than double the 47.46 billion issued Wednesday. The issuers included HDB Financial Services, Axis Securities, Hindustan Petroleum, India Cements, and Grasim Industries. Hindustan Petroleum raised INR 17.50 billion via 90-day CP at a weighted average yield of 6.72%, while Axis Securities raised INR 5 billion via 89-day CP at a weighted average yield of 6.90%.  

 

--Primary market
* Bank of Baroda, HDFC Bank, IDFC FIRST Bank, and Karur Vysya Bank were among the CD issuers. 

* HDB Financial Services, Axis Securities, Hindustan Petroleum, India Cements, and Grasim Industries were the major issuers of CPs. 

 

--Secondary market

* ICICI Bank's CD maturing Monday was traded eight times at a weighted average yield of 5.29%
* Hindustan Petroleum's CP maturing Monday was traded twice at a weighted average yield of 5.31%

 

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:

 

Certificates of deposit		Commercial paper
Thursday	Wednesday	Thursday	Wednesday
72.20	141.90	46.50	55.60

 

End

 

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

 

Edited by Saji George Titus

 

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