Markets continue to trade flat with negative bias

Key Indian benchmarks continue to trade flat with negative bias in afternoon session, tracking weak cues from other Asian markets. Stocks from energy, FMCG and healthcare counters were trading lower, while telecom, consumer durables and realty counters were supporting the markets. Trade sentiment were cautious as India's services sector activity expanded at a slower pace in December as rates of growth in sales eased to a three-month low and staff hiring came to a halt amid weak business optimism. The seasonally adjusted India Services Business Activity Index fell from 53.7 in November to 52.3 in December. On the sectoral front, entertainment stocks remained in focus after Tamil Nadu government allowed movie theatres to operate at 100 per cent capacity in the state. On the global front, Asian markets were trading mostly lower as surging virus counts and China-U.S. tensions weighed on sentiment. Back on street, in scrip specific developments, Bajaj Finance tumbled as RBI imposes Rs 2.5 crore penalty, while Titan Company gained as its jewellery division enters into growth phase.

The BSE Sensex is currently trading at 48388.33, down by 49.45 points or 0.10% after trading in a range of 48313.93 and 48616.66. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.90%, while Small cap index was up by 0.65%.

The top gaining sectoral indices on the BSE were Telecom up by 1.92%, Consumer Durables up by 1.65%, Realty up by 1.61%, Metal up by 1.50% and PSU was up by 1.50%, while Energy down by 1.32%, FMCG down by 0.68% and Healthcare was down by 0.04% were the few losing indices on BSE.

The top gainers on the Sensex were ONGC up by 3.11%, Bharti Airtel up by 2.32%, SBI up by 2.01%, Power Grid up by 1.60% and ICICI Bank was up by 1.46%. On the flip side, ITC down by 2.10%, Reliance Industries down by 1.94%, Bajaj Finance down by 1.20%, Bajaj Finserv down by 1.12% and Hindustan Unilever was down by 0.74% were the top losers.

Meanwhile, Reserve Bank of India (RBI) paper has said that a rise in credit from banks may not always find its way towards increasing investments as business entities may use credit lines to finance their current liabilities. It also said that banks respond to changes in money market spreads faster and better than changes in policy rates, which are announced by the RBI bi-monthly.

Monetary policy transmission has remained a pivotal topic of interest across all central bankers. Empirically, however, it is hard to disentangle the effects of a policy change on firms' investment demand, banks' credit supply and their interactions. The paper uses a unique ?rm-bank matched dataset from India to provide new insights into the monetary policy transmission mechanism. The findings of the paper indicate that monetary policy transmission works with a lag for bank lending.

For firms, aggregate demand conditions in the market may drive investment demand which may, in turn, be correlated with the monetary policy easing cycle. However, final credit flows from banks depend on the liquidity position of banks that the firms are attached to. These findings indicate the importance of banks' liquidity in addition to the balance sheet channel for improving the efficacy of monetary policy transmission. The central bank said the views expressed in these papers are those of authors and not of the RBI.

The CNX Nifty is currently trading at 14198.10, down by 1.40 points or 0.01% after trading in a range of 14174.70 and 14244.15. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 3.63%, ONGC up by 3.16%, Wipro up by 2.45%, Bharti Airtel up by 2.27% and SBI was up by 1.95%. On the flip side, ITC down by 2.10%, Reliance Industries down by 1.95%, Bajaj Finance down by 1.15%, Bajaj Finserv down by 1.09% and Hindustan Unilever was down by 0.81% were the top losers.

Asian markets were trading mostly lower; KOSPI fell 22.36 points or 0.75% to 2,968.21, Taiwan Weighted dropped 16.90 points or 0.11% to 14,983.13, Jakarta Composite lost 115.73 points or 1.89% to 6,021.61, Straits Times trembled 1.40 points or 0.05% to 2,858.28 and Nikkei 225 was down by 102.69 points or 0.38% to 27,055.94.

On the other side, Hang Seng increased 0.93 points or 0% to 27,650.79 and Shanghai Composite was up by 5.33 points or 0.15% to 3,534.01.