Mumbai: Insurance companies rose in a relief rally in Friday’s trading as analysts said investors may be judging that the recent underperformance in these shares on account of a policy move in the Union Budget earlier this year that is expected to hurt the industry’s profitability could be excessive. Shares of HDFC Life Insurance, ICICI Prudential Life Insurance Company, SBI Life Insurance, and Life Insurance Corporation of India ended 1-5% higher on the National Stock Exchange. To avoid the misuse of insurance as an investment avenue, the budget had imposed taxes on maturity benefits over a total annual premium of ₹500,000 effective from April 1. This led to shares of insurance companies coming under pressure, as move was seen impacting growth.
“Investors are understanding that the changes in tax regime bought about in February will probably not impact demand that significantly, and that it will not be as bad as anticipated. Monthly numbers have also not been bad – especially after a blockbuster March, so that is helpful,” Madhukar Ladha, director, Nuvama Institutional Equities said.
On Friday, Vibha Padalkar, the managing director at HDFC Life Insurance told CNBC TV18 that not only was business in May better than that in April, June would hopefully be better than that in May.
