Corporate Bonds In The Secondary Market See 30% Surge In FY26

India’s secondary corporate bond market is picking up pace after staying relatively quiet for years. In FY26, trading volumes climbed nearly 30% to about ₹22.07 lakh crore, up from ₹17.1 lakh crore last year. For a market that has long dealt with low liquidity and limited retail interest, this kind of jump is hard to ignore.

What makes this move more interesting is the pace at which things have changed. For a market that was slow to evolve, this increase signals a deeper shift beneath the surface.

Is this a short-term spike, or the beginning of a more structural change in how India’s bond market functions?

What Is Behind The Sharp Rise In Corporate Bond Market Activity?

A big reason behind this shift is a set of regulatory changes that have made the market far easier to access and trade. The Securities and Exchange Board of India and the Reserve Bank of India have both focused on improving participation and liquidity in the corporate bond segment over the past year.

One key change is the reduction in minimum investment size to ₹10,000, from ₹1 lakh earlier. That alone makes a big difference. It brings in a much wider set of investors who earlier found the entry barrier too high.

The liquidity window is another meaningful change. It makes exits a lot more practical by ensuring there is a system in place to match sellers with buyers. For a market where selling was not always easy, that does make a difference.

Financing rules have eased as well. That makes taking loans against corporate bonds much simpler, making them more practical to use.

Access has improved, too. Online bond platforms are making it simpler to discover and buy bonds, removing some of the friction that used to hold investors back.

There is also a broader push from the government to improve the market-making framework, as highlighted in the Union Budget. Put together, these changes are starting to show up in how actively this market is now being traded.

How Are Retail Investors And Market Conditions Contributing?

Retail interest in this market is growing. Easier access and lower entry points have helped, but market conditions are adding to the momentum as well.

Phases of volatility in equities tend to push some investors towards fixed income, where returns feel relatively more stable. When interest rates are expected to soften, bonds tend to look more attractive since prices usually move up in such phases.

At the same time, more investors are thinking about diversification. Market experts note that portfolios are no longer equity-heavy, and bonds are slowly finding a place. This shift in behaviour is adding to the overall momentum.

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What Does This Mean For Investors Going Forward?

For investors, the key shift is around access and usability. Corporate bonds are no longer as difficult to enter or exit as they once were, which makes them more relevant in a portfolio context.

That said, this is still not a uniform market. Liquidity can vary quite a bit. Some bonds trade smoothly, while others can be harder to exit when markets get volatile. Higher yields often come with added credit risk, and rising rates can bring bond prices down if you exit early.

From a portfolio lens, bonds are increasingly being used to balance equity exposure rather than replace it. The opportunity is clearer now, but it still calls for a measured approach.

Sources:

Financial Express

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