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Informist, Wednesday, Jul. 8, 2026

 

By Meera Nair

 

MUMBAI – Yields on commercial papers and certificates of deposit rose by 5–20 basis points across most tenors in the secondary market Wednesday as weak demand from mutual funds and global risk-off sentiment, following comments by US President Donald Trump that the US-Iran ceasefire was "over", led to minimal participation in the short-term debt market, dealers said.

 

Although the banking system remained in liquidity surplus, dealers said the surplus was not large enough to encourage aggressive buying of CPs and CDs after the recent sharp rally in money market instruments. "The market sentiment has turned cautious again because of the geopolitical developments. Mutual funds did not participate much today and that pushed yields higher," a dealer at a brokerage firm said.

 

The net liquidity absorbed by the Reserve Bank of India--a proxy for surplus liquidity in the banking system--rose to INR 1.26 trillion Tuesday from INR 1.19 trillion Monday as banks reduced their cash balances with the RBI. However, dealers said the current liquidity surplus remains well below the INR 2.5 trillion–INR 3.0 trillion level they consider comfortable enough to support stronger demand for money market instruments.

 

Yields on three-month AAA-rated certificates of deposit rose 20 basis points to 6.60-6.65% from 6.40-6.50% Tuesday. Six-month yields climbed 10 basis points to 6.85-6.90% from 6.75-6.80%, while one-year yields rose 5 basis points to 7.10-7.20% from 7.05-7.10%.

 

In the commercial paper market, yields on three-month AAA-rated papers issued by non-banking finance companies were largely unchanged at 6.90-7.00% compared with 6.90-6.95% Tuesday. Six-month yields rose 10 basis points to 7.20-7.25%, while one-year yields increased by a similar margin to 7.60-7.65%.

 

"Activity was concentrated in the December and March CD segment, while the CP market remained largely inactive as mutual funds stayed on the sidelines throughout the day," the dealer said.

 

Certificate of deposit turnover fell sharply to INR 60.95 billion as of 1723 IST from INR 103.85 billion Tuesday, according to data from the Clearing Corp of India Ltd. Commercial paper turnover, however, rose modestly to INR 52.85 billion from INR 46.25 billion.

 

Dealers said trading activity remained subdued as investors refrained from building fresh positions after the recent rally in money market instruments.

 

Primary market activity also slowed after the heavy fund-raising seen at the start of the quarter. Certificate of deposit issuance rose slightly to INR 47.25 billion as of 1752 IST from INR 43.50 billion Tuesday. Union Bank of India, and Indian Overseas Bank were the only issuers of CDs Wednesday. Union Bank of India raised INR 37.25 billion through two papers at a weighted average yield of 6.50?ch. Indian Overseas Bank raised INR 10 billion through 84-day paper at a weighted average yield of 6.42%, according to CCIL data.

 

Commercial paper issuance also fell to INR 30.93 billion as of 1732 IST from INR 70.23 billion Tuesday as funding requirements moderated after the quarter's beginning borrowing rush. Major issuers included L&T Finance, ICICI Securities, Tata Projects, Kotak Securities and Godrej Properties. L&T Finance and ICICI Securities each raised INR 3.00 billion through 22-day and 76-day papers at weighted average yields of 6.36% and 6.77%, respectively. Tata Projects raised INR 2.00 billion through 90-day papers at 6.92%, Kotak Securities raised INR 2.50 billion through 23-day papers at 6.50%, while Godrej Properties raised INR 1.25 billion through 48-day papers at a weighted average yield of 6.65%.

 

--Primary market
* Union Bank of India and Indian Overseas Bank were the sole issuer of CD Wednesday.   

* L&T Finance, ICICI Securities, Tata Projects, Kotak Securities, Godrej Properties Ltd. were among the CP issuers Wednesday.

 

--Secondary market

* Small Industries Development Bank of India's CD maturing on Thursday was traded four times at a weighted average yield of 5.18%
* Bajaj Housing Finance's CP maturing Thursday was traded four times at a weighted average yield of 5.26%

 

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
60.95	103.85	52.85	46.25

 

End

 

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

 

Edited by Deepshikha Bhardwaj

 

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