More Stories

Informist, Wednesday, Jul. 29, 2026

By Meera Nair

MUMBAI – Yields on certificates of deposit and commercial paper were largely unchanged Wednesday as month-end caution and redemption pressure on mutual funds offset the positive impact of improving banking system liquidity, dealers said. Activity remained selective, with participants preferring to stay on the sidelines until fresh funds return to the market in early August.

Yields on three-month and six-month "AAA"-rated certificates of deposit were unchanged at 6.80-6.85% and 6.90-6.95%, respectively. One-year CD yields were quoted at 7.10-7.15%, up 10 basis points from 7.00-7.05% Tuesday.

Dealers said mutual funds, which were among the largest investors in short-term debt, continued to face redemption pressure at the month-end. This limited their ability to deploy fresh money into the market, keeping demand subdued despite an improvement in liquidity conditions.

"There was better activity in the CD market than the CP market because CDs are more liquid, and participants remained cautious ahead of the month-end," a dealer with a brokerage firm said.

Trading in the commercial paper market remained patchy. There were no trade in the three-month and one-year "AAA"-rated CP segment issued by non-banking finance companies, while six-month CP yields eased by 10 basis points to 7.30-7.35% from 7.40-7.45% Tuesday.

Primary issuance of certificates of deposit fell sharply to INR 7.5 billion as of 1700 IST from INR 16 billion Tuesday, according to data from Clearing Corp. of India Ltd. Union Bank of India and Indian Bank were the only issuers. Union Bank of India raised INR 6.00 billion at a weighted average yield of 6.90%, while Indian Bank raised INR 1.5 billion through a 320-day CD at a weighted average yield of 7.09%.

Commercial paper issuance, however, rose to INR 77.00 billion as of 1715 IST from INR 55.35 billion Tuesday. Major issuers included Small Industries Development Bank of India, Angel One Ltd., L&T Finance Ltd., TVS Credit Services Ltd., and Tata Realty and Infrastructure Ltd.

SIDBI raised INR 60 billion through 91-day CP at a weighted average yield of 6.85%. Angel One raised INR 4.1 billion through 91-day CP at a weighted average yield of 8.28%, while L&T Finance raised INR 2.25 billion at 6.87% and TVS Credit Services raised INR 2.00 billion at 6.65%.

Secondary market activity was mixed. CD turnover rose to INR 85.75 billion as of 1715 IST from INR 69.35 billion Tuesday, according to CCIL data, reflecting relatively better demand for bank-issued instruments. In contrast, CP turnover dropped sharply to INR 15.85 billion from INR 54.50 billion, indicating weaker participation in the corporate debt segment.

"Corporates and banks are the buyers in the market currently, but their participation is not sufficient to offset the pressure from mutual fund redemptions at the month-end," the brokerage dealer said.

Dealers expect market activity to improve once month-end redemption pressure eases and mutual funds receive fresh inflows. "By the first or second week of August, things should improve if geopolitical tensions do not flare up again. That should also bring better participation from traders," the dealer said.

Meanwhile, liquidity conditions in the banking system continued to improve. The RBI's net liquidity absorption--a proxy for the systemic liquidity surplus--rose marginally to INR 1.07 trillion Tuesday from INR 1.00 trillion Monday. Dealers attributed the increase in surplus liquidity to banks reducing their cash balances with the RBI. Cash balances parked with the central bank declined to INR 8.00 trillion Tuesday from INR 8.11 trillion Monday.

"Liquidity is in a better position now, and I think this trend will continue over the coming weeks," the dealer said.

--Primary market
*Union Bank of India and Indian Bank were only the CD issuers Wednesday.

* Small Industries Development Bank of India, Angel One Ltd., L&T Finance Ltd. TVS Credit Services Ltd., Tata Realty and Infrastructure Ltd., were among the CP issuers Wednesday.

--Secondary market

* Punjab National Bank Ltd.'s CD maturing Thursday was traded three times at a weighted average yield of 5.29%.
* HDFC Securities Ltd.'s CP maturing Thursday was traded once at a weighted average yield of 5.33%.

The following were the volumes, in INR billion, in the secondary market for short-term debt at 1715 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

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2026. All rights reserved.