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Informist, Wednesday, Sept. 16, 2026

 

By Meera Nair

 

MUMBAI – Amid ample liquidity, yields on certificates of deposit and commercial papers were mixed across key tenors Wednesday as market participants adopted a wait-and-watch approach ahead of the US Federal Reserve's Federal Open Market Committee meeting outcome later in the day, dealers said. The market is awaiting clarity on the US central bank's interest-rate outlook, with dealers expecting activity to pick up after the decision.

 

AAA-rated three-month CD yields rose 5 bps to 6.20% from 6.15% Tuesday, while six-month and one-year CD yields were rangebound at 6.75-6.80% and 7.25-7.30%, respectively. The one- to six-month and Jan-Feb segments were the most active in the CD market.

 

The RBI's net liquidity absorption – a proxy for the banking system's liquidity surplus – was INR 9.85 trillion Tuesday, down from INR 10.41 trillion Monday. The RBI's second overnight variable rate reverse repo auction for INR 1 trillion was undersubscribed. 

 

The central bank conducted the second VRRR auction after the first auction was oversubscribed for the first time since Apr 10. The market was expecting the second VRRR to receive around INR 700 billion in bids, according to the median of an Informist poll. However, amid outflows towards advance tax payments, the RBI received only INR 403.02 billion of offers in the second auction.

 

At the first overnight VRRR auction, the RBI received offers worth INR 3.17 trillion and accepted INR 2.50 trillion at a cut-off rate of 5.24%.

 

Yields on AAA-rated three-month CPs issued by non-banking financial companies rose 10 bps to 6.80-6.85% from 6.70% in the previous session, while six-month CP yields were unchanged at 7.15%. There were no trades in the one-year segment. 

 

"Mutual funds are in wait-and-watch mode, which has kept the market dull... they are buying only in a few tenors. This has affected the confidence of the whole market today (Wednesday)," a dealer at a brokerage said.

 

Primary issuances in the CP market rose to INR 120.17 billion from INR 101 billion Tuesday, according to CCIL data. Export-Import Bank of India, Reliance Retail Ventures, ICICI Securities, Tata Power Co., HDFC Securities, and Sundaram Finance were among the major issuers.

 

EXIM Bank borrowed INR 31 billion through a 30-day CP at a weighted average yield of 5.70%, while Reliance Retail Ventures raised INR 27.50 billion via a 44-day CP at a yield of 5.95%. ICICI Securities raised INR 5.25 billion through 90-day CPs at 7.00%. Tata Power Co., HDFC Securities, and Sundaram Finance raised INR 5 billion each at 6.18%, 6.75%, and 6.73%, respectively.

 

In the CD market, HDFC Bank and Punjab and Sind Bank were the only issuers. HDFC Bank raised INR 18.00 billion at a weighted average yield of 6.18%, while Punjab and Sind Bank raised INR 10.00 billion at 6.32%. Both raised funds through 91-day papers.

 

In the secondary market, CD volumes surged to INR 130.70 billion from INR 92.30 billion Tuesday, while CP volume rose to INR 62.90 billion from INR 39.75 billion.

"In this week and by next week, I expect the rates to go higher as the sentiment is not good because of the US yields and crude oil price," the dealer from the brokerage firm said.

 

TATA MF FUND

Meanwhile, the launch of Tata Mutual Fund's 3–6 month debt index fund highlights growing interest among asset managers in short-duration fixed-income products, as investors seek exposure to prevailing short-term yields while limiting interest-rate risk, market participants said.

 

The Tata CRISIL-IBX Financial Services 3–6 Months Debt Index Fund, which opened for subscription Tuesday and closes Sep 22, will track the CRISIL-IBX Financial Services 3–6 Months Debt Index. The scheme will invest in AAA-rated financial-services issuers through certificates of deposit, commercial papers, and corporate bonds.

 

"The short maturity is particularly relevant in the current environment because interest-rate risk is much lower than in a long-duration bond fund," said Imran Khan, director at EquiRize Securities.

 

The product lets investors gain exposure to a defined short-duration portfolio without selecting individual securities, Khan said.

 

The launch comes amid increasing availability of CRISIL-IBX-based fixed-income products across maturity buckets. SBI Mutual Fund and HDFC Asset Management Co have launched funds tracking the CRISIL-IBX Financial Services 9–12 Months Debt Index, while several fund houses offer products tracking the 3–6 month index. SBI Mutual Fund launched its 9–12 month fund in April 2026.

 

--Primary market

* HDFC Bank and Punjab and Sind Bank were the only CD issuers Wednesday.

* Export-Import Bank of India, Reliance Retail Ventures, ICICI Securities, Tata Power Co., HDFC Securities, and Sundaram Finance were among key CP issuers Wednesday.  

 

--Secondary market

*Punjab National Bank's CD maturing Thursday was traded five times at a weighted average yield of 5.06%.
* LIC Housing Finance's CP maturing Thursday was traded four times at a weighted average yield of 4.94%.

 

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
Wednesday	Tuesday	Wednesday	Tuesday
130.70	92.30	62.90	39.75

 

End

 

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

 

Edited by Saji George Titus

 

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