Insurance stks gain; HDFC Life adds 5% on Nifty50 inclusion, SBI Life up 2%

HDFC Life Insurance Company will replace Anil Agarwal-controlled Vedanta in the benchmark index with effect from July 31.

Shares of insurance companies were in focus on Friday, with HDFC Life Insurance Company ralling 5 per cent to Rs 576 on the National Stock Exchange (NSE), after the exchange announced inclusion of the insurance company in the Nifty 50 index from July 31.

HDFC Life Insurance Company will replace Anil Agarwal-controlled Vedanta in the benchmark index, the exchange said in a release on Thursday.

“The Index Maintenance Sub-Committee (IMSC) has decided to replace Vedanta from various indices on account of proposed voluntary delisting. The changes shall become effective from July 31, 2020 (close of July 30, 2020)," NSE said in a statement. READ HERE

HDFC Life Insurance Company will be the third company from the HDFC group which will feature in the Nifty50. Housing Development Finance Corporation (HDFC) and HDFC Bank are currently in the benchmark index.

Riding on the sentiment boost, SBI Life Insurance Company (Rs 833) and ICICI Prudential Life Insurance Company (Rs 437) from the life insurance sector were up 2 per cent each on the NSE, as compared to 0.50 per cent rise in the Nifty 50 index at 10:07 am.

Analysts at Emkay Global Financial Services are positive on the sector on the back of a structural story and fair resilience shown even in the current environment. Grace period on premium dues during the lockdown impacted Annualized premium equivalent’s (APE) of Q4.

The brokerage firm believes that Covid-19 may turn out to be a trigger for protection plans, pushing margin profiles of insurers higher. It has overweight rating on SBI Life Insurance and HDFC Life Insurance and underweight rating on MAXL, IPRU due to their high share of ULIPs. However, given the sharp run-up recently, valuations are not cheap, limiting upside potential. The volatility in equity markets is the key downside risk for IPRU and SBIL, it said.