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Informist, Wednesday, Sept. 30, 2026

By Meera Nair

MUMBAI – Yields on certificates of deposit and commercial papers fell Wednesday as quarter-end positioning and surplus liquidity supported demand, dealers said. Market participants are likely to remain cautious ahead of the Reserve Bank of India's Monetary Policy Committee meeting, with activity expected to improve after the policy, they said.

Yields on AAA-rated three-month CDs fell five basis points to 6.25-6.30% from 6.30-6.35% Tuesday, while six-month CD yields also fell five basis points to 6.80-6.85% from 6.85-6.90% in the previous session. Yields on one-year CDs were at 7.40-7.45%, compared with 7.45-7.50% Tuesday. The January-February-March segments saw active participation, dealers said.

"Today (Wednesday), even though the CD market was volatile, it was better as there was more buying in the October segment due to the month-end and quarter-end," a dealer from a brokerage firm said.

Yields on three-month AAA-rated non-banking finance companies were at 7.15-7.20%, while six-month yields fell five basis points to 7.30-7.35% from 7.35-7.40% Tuesday. One-year yields were at 7.80-7.85%.

"In the CP market, too, levels were better due to the quarter-close. Chances are high that more issuances will be there in October after policy," the dealer from the brokerage firm said.

Meanwhile, a dealer from a public-sector bank said CP and CD yields could fall in October, although the extent of the decline would depend on the supply from mutual funds. The dealer said the chances of yields rising were lower, with three-month yields likely to move higher while six-month and one-year yields could remain around current levels.

The RBI's net liquidity absorbed–-a proxy for the banking system's liquidity surplus–-was INR 4.66 trillion Tuesday, down from INR 4.80 trillion Monday. The decline in the liquidity surplus could be due to the settlement of the RBI's dollar sales in the spot market to support the rupee and sell-buy swaps in the dollar-rupee forward market, which drained rupee liquidity, dealers said.

Government spending had been advanced to Friday and Monday, adding to the liquidity surplus. Spending may resume only early in October as payments under government schemes begin, while no significant inflow was seen Tuesday despite expectations of such inflows, dealers said.

The rise in overnight rates is likely to weigh on subscription at the RBI's INR 2-trillion variable rate reverse repo auction. Traders had expected subscription of INR 1.00 trillion at a cut-off rate of 5.24%, according to the median of an Informist Poll. 

There were no CD issuances Wednesday, while primary CP issuances fell to INR 27.30 billion from INR 37.20 billion Tuesday, according to data from Clearing Corp. of India Ltd. HDB Financial Services Ltd., Aditya Birla Housing Finance, Avenue Supermarts Ltd., Kotak Securities, and Samvardhana Motherson International Ltd. were among the issuers.

HDB Financial Services raised INR 7 billion through a 35-day CP at a weighted average yield of 6.80%, while Aditya Birla Housing Finance raised INR 6 billion through a 76-day CP at 6.51%. Avenue Supermarts raised INR 5 billion at a weighted average yield of 6.12%, while Kotak Securities raised a total of INR 3 billion through two CPs at 6.55% and 7.00%.

In the secondary market, CD volume rose to INR 72.05 billion from INR 68.60 billion Tuesday, while CP volumes fell sharply to INR 10.75 billion from INR 29.41 billion.

The impact of liquidity on CP and CD rates is likely to be more pronounced in October, particularly for shorter-tenor papers of up to three months, while rates on six-month and one-year papers will depend more on credit demand, a dealer from a public-sector bank said.                 

"Liquidity has an impact, especially on issuances from a year-on-year perspective. In the first and second quarters too, domestic supply of CPs and CDs has reduced considering the outstanding position," the dealer said.

The dealer expects banks, including public sector and private banks, to step up CD issuances at the beginning of the quarter as cash deployment is likely to be lower, adding to available funds for issuance.

--Primary market

* There were no CD issuances Wednesday.

* HDB Financial Services Ltd., Aditya Birla Housing Finance, Avenue Supermarkets Ltd., Kotak Securities, Samvardhana Motherson International Ltd., issued CPs Wednesday.  

--Secondary market

* HDFC Bank's CD maturing Thursday was traded four times at a weighted average yield of 5.16%.
* NABARD's CP maturing Thursday was traded three times at a weighted average yield of 5.18%.

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:

End

Edited by Deepshikha Bhardwaj

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