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Informist, Thursday, Jul. 23, 2026

 

By Meera Nair

 

MUMBAI – Yields on certificates of deposit and commercial papers remained elevated across tenors on Thursday as escalating tensions in West Asia and tight banking system liquidity kept market participants cautious, dealers said. While three-month CD yields eased marginally, dealers said the move was not sufficient to revive trading activity, as investors continued to stay on the sidelines.

 

Yields on three-month AAA-rated certificates of deposit eased by 5 basis points to 6.80-6.85%. Six-month CD yields were quoted at 6.90-6.95%, unchanged from the previous session. There were no trades in the one-year segment as participants avoided taking positions in longer-tenor papers amid volatile conditions. Dealers said most secondary market activity remained concentrated in papers maturing between three months and seven to eight months.

 

Yields on AAA-rated commercial papers issued by non-banking finance companies were also largely unchanged. Three-month CP yields were quoted at 7.30-7.35%, while six-month yields were at 7.45-7.50%. One-year CP yields rose by 10 basis points to 7.65-7.70% as investors demanded a higher premium for longer-tenor papers.

 

"Traders are cautious as crude oil prices have risen sharply while money market rates have not adjusted significantly. In such a volatile environment, participants would rather wait for clarity than lock into positions simply because yields appear attractive," a dealer at a brokerage firm said.

 

The dealer said market conditions were likely to improve from early next week as month-end liquidity flows start returning to the banking system, easing funding pressures and bringing down short-term rates.

 

Primary issuance of certificates of deposit rose to INR 88.75 billion as of 1712 IST from INR 45 billion on Wednesday, according to data from the Clearing Corp. of India Ltd. Punjab National Bank, HDFC Bank, and IDFC FIRST Bank tapped the market during the day. Punjab National Bank raised a total of INR 48.75 billion through two issuances at weighted average yields of 6.29% and 6.80%. HDFC Bank raised INR 30.50 billion through a 69-day CD at 6.87%, while IDFC FIRST Bank raised INR 9.50 billion through 90- and 91-day papers at 7.02?ch, the CCIL data showed.

 

Commercial paper issuance, however, eased to INR 44.31 billion as of 1705 IST from INR 48.40 billion on Wednesday. Among the major issuers, REC raised INR 30 billion through 91-day CP at a weighted average yield of 6.90%. Tata Communications raised INR 7.50 billion through 180-day CP at 7.20%, while HDFC Securities and Kotak Securities raised INR 2.10 billion and INR 2 billion, respectively.

 

Secondary market activity weakened, with CD turnover falling to INR 89.35 billion at 1715 IST from INR 140.55 billion on Wednesday, according to CCIL data. Commercial paper turnover also declined to INR 21.85 billion from INR 33.50 billion.

 

The net liquidity absorbed by the Reserve Bank of India – a proxy for the banking system's liquidity surplus — fell to INR 28.84 billion on Wednesday from INR 92.89 billion Tuesday, the lowest surplus since Jun. 29. Dealers attributed the decline mainly to the settlement of state government bond auctions, which drained around INR 200 billion from the banking system, along with GST and month-end outflows.

 

"Liquidity is broadly neutral. The current tightening is largely because of GST outflows and month-end factors, but conditions should improve next week as July-end flows start returning to the system," the dealer said.

 

--Primary market
* Punjab National Bank, HDFC Bank, and IDFC FIRST Bank were the CD issuers Thursday.   

* REC, Tata Communications, HDFC Securities, and Kotak Securities were among the CP issuers Thursday.

 

--Secondary market

* Bank of Baroda's CD maturing Friday was traded five times at a weighted average yield of 5.26%
* Kotak Mahindra Prime's CP maturing Friday was traded once at a weighted average yield of 5.29%

 

The following were the volumes, in INR billion, in the secondary market for short-term debt at 1715 IST, as detailed on CCIL's F-TRAC platform:

 

Certificates of deposit		Commercial paper
Thursday	Wednesday	Thursday	Wednesday
89.35	140.55	21.85	33.50

 

End

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

 

Edited by Saji George Titus

 

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