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Informist, Tuesday, Aug. 11, 2026

 

By Meera Nair

 

MUMBAI – Rates on certificates of deposit ended lower on Tuesday after moving in both directions through the session, with three-month and six-month papers easing 5-8 basis points towards close as banks continued to wait for further decline in short-term funding costs, dealers said. Activity in the commercial paper market remained subdued in the three-month, six-month and one-year segments as participants stayed in a wait-and-watch mode.

 

Three-month certificate of deposit yields were quoted at 6.30-6.65%, down 8 basis points from 6.38% on Monday, while six-month yields eased 5 bps to 6.65-6.70% from 6.70-6.75?ay earlier. There were no trades in the one-year segment as participants continued to favour shorter-tenure papers.

 

The CD market was active in the morning, with yields initially easing, before rising 2-3 bps in the second half of the session as mutual funds were largely sellers. Yields then fell again by 5-8 bps towards close in the three-month and six-month segments. Dealers said they were unable to identify a specific reason for the late-session decline.

 

"Today's market was a very mixed market as it was active in the morning while in the second half we saw the yields going up by 2-3 bps and again cooled off later in the three-month and six-month segments," a dealer from a brokerage firm said.

 

Banks had expected three-month CD yields to fall towards 6.30% on Monday, and Tuesday's trading at these levels has strengthened expectations of a further decline towards 6.20-6.25%, the dealer said.

 

"Yesterday, banks were expecting the three-month segment to come down to 6.30% levels, but today, after seeing those segments trading at those levels, they have more confidence that three-month segment can come down to 6.20-6.25% levels, so they are waiting for that to happen. Up until then, there will be less activity in those segments," the dealer said.

 

There were no trades in three-month, six-month and one-year AAA-rated commercial papers issued by non-banking finance companies, as dealers lacked clarity on the direction of rates in those tenors and preferred to remain active in shorter maturities, particularly August and September papers. December and February-March maturities were among the more active segments in the CD market, dealers said.

 

Secondary market turnover in CDs rose sharply to INR 221.40 billion from INR 113.45 billion on Monday, according to Clearing Corp. of India Ltd. data. Primary market CD issuances rose modestly to INR 79.75 billion from INR 75.00 billion a day earlier, with HDFC Bank and Bank of Baroda among the issuers.

 

HDFC Bank raised INR 42.00 billion through a 91-day CD at a weighted average yield of 6.53%, while Bank of Baroda raised INR 37.75 billion through a CD of the same maturity at a weighted average yield of 6.38%.

 

In the commercial paper market, secondary market turnover fell to INR 53.20 billion from INR 82.55 billion on Monday. Fresh issuances, however, rose sharply to INR 100.04 billion as of 1713 IST from INR 82.55 billion a day earlier. NTPC Ltd., Hindustan Petroleum Corp. Ltd., Aditya Birla Capital Ltd., HDFC Securities, Jio Credit Ltd., L&T Finance Ltd., Avenue Supermarkets Ltd. and UltraTech Cement Ltd. were among the issuers.

 

NTPC raised INR 30 billion through commercial paper maturing on Nov 6 at a weighted average yield of 6.53%, while Hindustan Petroleum raised INR 10.50 billion at 6.39%. HDFC Securities raised INR 5 billion through 91-day paper at a weighted average yield of 7.02%, while Jio Credit raised INR 9.50 billion at 7.08%, according to Clearing Corp. of India data.

 

Banks are likely to continue monitoring the three-month segment on Wednesday for further signs of easing, while the current liquidity situation remains comfortable, the dealer said.

 

"By tomorrow (Wednesday), banks expect the three-month rates to cool down to the expected level and so we will be monitoring the same, and the slight fall in liquidity is not something to worry about as we are still in the comfort level," the dealer said.

 

Net liquidity absorbed by the Reserve Bank of India, a proxy for liquidity surplus, fell to INR 3.19 trillion on Monday from INR 3.49 trillion on Sunday. The decline largely reflected the settlement on Monday of the INR 320-billion weekly government securities auction conducted on Friday, dealers said.

 

--Primary market 

* HDFC Bank Ltd. and Bank of Baroda issued CDs Tuesday.

* Hindustan Petroleum Corp. Ltd., Aditya Birla Capital Ltd., HDFC Securities, L&T Finance Ltd., Avenue Supermarkets Ltd., Ultratech Cement Ltd. were among CP issuers Tuesday.

 

--Secondary market

* Bank of Baroda's CD maturing Wednesday was traded 11 times at a weighted average yield of 5.11%.
* Kotak Securities Ltd.'s CP maturing Wednesday was traded twice at a weighted average yield of 5.08%.

 

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
Tuesday	Monday	Tuesday	Monday
221.40	113.45	100.04	82.55

 

End

 

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

 

Edited by Avishek Dutta

 

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