Insurance stocks tumble; ICICI Pru, SBI Life tank 11%, HDFC Life dips 10%

Shares of insurance companies, mainly life insurance, tumbled upto 11 per cent in intra-day trade on the BSE on Saturday after Finance Minister Nirmala Sitharaman proposed to list state-owned insurance behemoth Life Insurance Corporation (LIC) on stock exchanges.

Among individual stocks, ICICI Prudential Life Insurance Company (ICICI Pru) tanked 11 per cent to Rs 457 on the BSE in intra-day trade. SBI Life Insurance Company, too, slipped 11 per cent to Rs 886, while HDFC Life Insurance Company dipped 10 per cent to Rs 538 on the BSE.

Presenting the Budget for 2020-21, Finance Minister Nirmala Sitharaman said the government now proposes to sell a part of its holding in LIC by way of Initial Public Offer (IPO).

“Listing of companies on stock exchanges discipline a company and provides access to financial markets and unlocks its value. It also gives opportunity for retail investors to participate in the wealth so created,” she said on disinvestment.

An LIC IPO will help the government raise capital for other infrastructure investments. LIC's proposed IPO is likely to be the biggest so far.

“Capital Market investors will be disappointed with no relief on long term capital gain (LTCG) and the lack of big bang stimulus  on real estate or infrastructure.  The option to individuals to opt for a lower tax slab structure with no deductions or to continue with the earlier higher slabs with deductions for home loan EMIs, investments in insurance etc seems slightly confusing,” said Krishna Kumar Karwa, Managing Director - Emkay Global Financial Services on the Union Budget 2020.