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Informist, Tuesday, Aug. 4, 2026

 

By Meera Nair

MUMBAI – Turnover in the short-term debt market rose for the second consecutive session on Tuesday as improving investor sentiment ahead of the Reserve Bank of India's monetary policy decision and comfortable banking system liquidity encouraged secondary market activity, dealers said. Rates on certificates of deposit and commercial papers eased by 5-10 basis points from the previous session as market participants also drew comfort from the absence of any immediate geopolitical risks.

 

Certificates of deposit turnover rose to INR 167.07 billion as of 1709 IST from INR 112.70 billion on Monday, according to data from Clearing Corp. of India Ltd. Fresh CD issuances, however, declined to INR 45.25 billion from INR 62.75 billion. Commercial paper turnover also increased to INR 81.40 billion as of 1712 IST from INR 76.50 billion on Monday. CP issuances climbed sharply to INR 54.65 billion from INR 16.25 billion in the previous session.

 

"The rates were relatively higher in the secondary market in the second half of the day and this affected primary issuances, especially in the CD market," a dealer at a brokerage firm said.

 

HDFC Bank raised INR 40.25 billion through a certificate of deposit maturing on Nov. 4 at 6.88%, while UCO Bank raised INR 5 billion through paper of the same maturity at a weighted average yield of 6.91%, according to Clearing Corp. of India Ltd. data. Dealers said only two banks tapped the CD market on Tuesday, with investor interest concentrated in papers maturing during January-March and September.

 

In the commercial paper market, Bajaj Finance raised INR 10 billion through 104-day paper at a weighted average yield of 7.10%. Motilal Oswal Financial Services Ltd. raised INR 8 billion through 91-day paper at 7.51%, while HDFC Securities and Kotak Securities raised INR 5 billion and INR 3.25 billion, respectively, through 91-day papers at 7.25%, according to CCIL data.

 

Three-month certificate of deposit yields were quoted at 6.70-6.75%, down 10 basis points from 6.80-6.85% on Monday, while six-month yields were at 6.80-6.85%. Dealers said there were no trades in the one-year secondary CD segment.

 

Three-month AAA-rated commercial papers issued by non-banking finance companies were quoted at 7.05-7.10%, down five basis points from 7.10-7.15% on Monday. Six-month CP yields were quoted at 7.20-7.25%, while the one-year segment remained inactive.

 

"Participants are confident ahead of the RBI policy announcement tomorrow as they do not expect any major negative surprise. That confidence was reflected in the market activity throughout the day," another dealer at a brokerage firm said. The dealer added that rates could soften further over the coming days if surplus liquidity remains comfortable after the policy announcement.

 

The Reserve Bank of India's net liquidity absorption, a measure of surplus liquidity in the banking system, stood at INR 2.44 trillion on Monday, compared with INR 1.93 trillion on Sunday, as banks reduced their cash balances with the central bank. Banks' cash balances with the RBI fell to INR 8.57 trillion from INR 9.04 trillion a day earlier. The average daily cash reserve requirement for the fortnight ending Aug. 15 is INR 8.03 trillion.

   

--Primary market 

* HDFC Bank and UCO Bank were the only CD issuers Tuesday.

* Bajaj Finance, Motilal Oswal Financial Services Ltd., HDFC Securities, and Kotak Securities were among those that raised funds through CP Tuesday.

 

--Secondary market

* HDFC Bank's CD maturing Wednesday was traded seven times at a weighted average yield of 5.03%.
* HDFC Securities Ltd.'s CP maturing Wednesday was traded six times at a weighted average yield of 5.02%.

 

The following were the volumes, in INR billion, in the secondary market for short-term debt at 1830 IST, as detailed on CCIL's F-TRAC platform:

 

Certificates of deposit		Commercial paper
Tuesday	Monday	Tuesday	Monday
167.07	112.70	81.40	76.50

 

End

 

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

 

Edited by Deepshikha Bhardwaj

 

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