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Informist, Tuesday, Sept. 1, 2026

 

By Vaishali Tyagi

 

NEW DELHI – Yields on short-term debt instruments were broadly steady Tuesday, with trades concentrated in the up-to-six-month segment, dealers said. There were no trades reported in the one-year segment. Mutual funds and other investors were most active in the three-month segment, they said.

 

Dealers said the movement of 3-5 basis points on either side in the short-term debt market was largely due to mutual funds, which had faced redemption pressure a few weeks ago, returning to make purchases. However, with supply of certificates of deposit limited, there was a demand-supply mismatch, which resulted in marginal movement in yields.

"Mutual funds, actually, are the buyers now... they are not really inclined towards the one-year segment," a dealer at a private-sector bank said. "Mostly, they are trading in three-month, six-month segments. Also, very few banks are issuing CD these days because every bank is having a lot of liquidity as of now. So, there is a little demand-supply mismatch."

 

Dealers said the short-term debt market remained largely range-bound throughout the day as there were no major triggers. Levels were broadly in the same range as at the previous close. Rates are expected to remain in a tight band until mid-September, they said. "Maybe till 14th of September (yields will move in a narrow band)," the dealer quoted earlier said. "Post that advance tax outflows will go on 15th. So at that point of time there are chances that CP (commercial paper) and CD rates will increase by 5 to 15 bps across segments."

 

Yields on "AAA"-rated three-month CD were at 6.40-6.47%, broadly similar to 6.37-6.43% Monday. Six-month CD were also steady at 6.80-6.85%, same as Monday. There were no quotes for the one-year segment. 

 

On issuances, dealers said banks were not keen to issue fresh CD as systemic liquidity remains ample. "Banks are not eager to issue CD these days since they are sitting with ample liqudity due to flows from foreign currency non-resident (banks) deposits," a dealer at a brokerage firm said. "So, whatever their CD maturities are coming, they are just extinguishing it. They are not rolling it over."

 

Only INR 7 billion worth of CD were issued Tuesday as compared with INR 9 billion Monday, according to Clearing Corp. of India Ltd data. Indian Overseas Bank raised INR 5 billion through a 91-day CD at a weighted average yield of 6.45% while DCB Bank raised INR 2 billion through a CD of like maturity at a yield of 6.83%.

 

In commercial paper, yields were largely unchanged from Monday with no specific triggers, dealers said. Issuances fell to INR 43.03 billion from INR 119.50 billion Monday. Small Industries Development Bank of India raised INR 10 billion through a 91-day CP at a weighted average yield of 6.43%. Aditya Birla Capital raised INR 8.50 billion though two CP of different maturites. Other key issuers were Axis Securities, Bajaj Finance, HDFC Securities, and HDB Financial Services. 

 

In the secondary market, volume in the CD market fell to INR 91.45 Tuesday from INR 156.25 Monday, while volume in the CP market rose significantly to INR 96.95 billion from INR 37.80 billion. 

 

On the longer end, yields were tracking global cues such as crude oil prices, US Treasury yields, and other global factors rather than domestic liquidity conditions, dealers said. The net liquidity absorbed by the RBI, an indication of the liquidity surplus, hit INR 6.65 trillion Monday from INR 5.04 trillion Sunday.

 

--Primary market

* Indian Overseas Bank and DCB Bank issued CD Tuesday. 

* SIDBI, Aditya Birla Capital, Axis Securities, Bajaj Finance, HDFC Securities, and HDB Financial Services were among the key CP issuers.

 

--Secondary market

* Punjab National Bank's CD maturing Wednesday was traded six times at a weighted average yield of 5.04%.
* Reliance Retail Ventures' CP maturing Wednesday was traded 16 times at a weighted average yield of 5.04%.

 

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
91.45	156.25	96.95	37.80

 

End

 

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

 

Edited by Rajeev Pai

 

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