Informist, Monday, Oct 23, 2023
By Sony and Subhana Shaikh
MUMBAI – Rates on short-term debt instruments rose by five basis points on the back of selling by mutual funds as the liquidity deficit further widened in the banking system, dealers said.
This comes after rates rose on Thursday by 5 bps due to outflows on account of payments for goods and services tax.
Liquidity in the banking system was estimated to be in a deficit of 920.17 bln rupees, as against 178.58 bln rupees on Friday. The deficit in the banking system widened on account of outflows in the form of payment of goods and services tax amounting up to 1.5 trln rupees, dealers said.
Rates on three-month commercial papers issued by non-banking financial companies rose to 7.65-7.85% from 7.60-7.80% on Friday. Rates on similar maturity papers of manufacturing companies rose to 7.30-7.50% from 7.25-7.45%.
Rates on three-month certificates of deposit rose to 7.25-7.45% from 7.20-7.40% on Friday. So far today, no bank has issued CDs in the primary market.
High rates kept issuances on the lower side in the primary market today, with commercial papers aggregating to 5.75 bln rupees issued, as against 5 bln rupees on Friday.
While Axis Securities raised 4 bln rupees through papers maturing in three months at 7.83%, Aditya Birla Finance Ltd also issued a three-month CP and raised 1.5 bln rupees at 7.68%.
On Friday, Sundaram Finance was the lone issuer of commercial papers, raising 5 bln rupees through papers maturing in three months at 7.58% rate.
“Today, the market was slightly cold, and it was not better. Primary market saw less activity,” a dealer with a mid-sized brokerage firm said.
Overall, market participation was also low as traders avoided placing large bets ahead of a holiday.
Domestic financial markets are closed on Tuesday on account of Dussehra.
–Primary market
* Axis Securities and Aditya Birla Finance Ltd raised funds through CPs.
–Secondary market
* Indian Bank’s CD maturing on Oct 25 was dealt six times at a weighted average yield of 6.7915%
* ICICI Securities’ CP maturing on Oct 25 was dealt four times at a weighted average yield of 6.8242%.
At 1821 IST, the following were the volumes, in bln rupees, in the secondary market for short-term debt, as detailed by the Clearing Corp of India’s F-TRAC platform:
–Secondary market
* Indian Bank’s CD maturing on Oct 25 was dealt six times at a weighted average yield of 6.7915%
* ICICI Securities’ CP maturing on Oct 25 was dealt four times at a weighted average yield of 6.8242%.
At 1821 IST, the following were the volumes, in bln rupees, in the secondary market for short-term debt, as detailed by the Clearing Corp of India’s F-TRAC platform:
NOTE: Details of the deals have been received from market sources.
End
Edited by Akul Nishant Akhoury
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