Financials advance as FM promises measures to boost MFs, insurance

Shares of eight firms operating insurance and mutual fund business rose by 0.37% to 4.53% on BSE after Finance Minister P. Chidambaram on 6 August 2012, assured a number of decisions for encouraging more investments in mutual funds and insurance.

Bajaj Finserv (up 4.53%), IDFC (up 3.7%), Max India (up 3.37%), Reliance Capital (up 3.27%), ICICI Bank (up 2.08%), State Bank of India (up 2.04%), HDFC (up 1.47%) and Religare Enterprise (up 0.37%), edged higher. However, Aditya Birla Nuvo fell 0.59% to Rs 784.95.

The BSE Sensex rose 188.82 points, or 1.08% to 17,601.78.

Shares of firms which run/own insurance and or mutual fund business, either directly or through their subsidiaries, edged higher after Union Finance Minister P. Chidambaram on Monday, 6 August 2012, said the government will announce a number of decisions in the next few weeks to attract more people to invest in mutual funds, insurance policies and other well-designed instruments.

According to reports, buying life insurance policies may get more attractive with the government looking at further tax sops for investment in risk covers as part of its plan to wean investors away from gold to financial instruments, including mutual funds. While insurance policies will provide the government with long-term resources as bulk of the funds are invested in government securities, mutual funds will generate resources for stock markets as well as in the debt instruments.

HDFC owns a controlling stake in HDFC Standard Life Insurance. ICICI Bank holds 74% in the ICICI Prudential Life Insurance Company. State Bank of India holds 74% in the SBI Life Insurance Company. Aditya Birla Nuvo holds 74% in Birla Sun Life Insurance Company. Reliance Capital holds a controlling stake in Reliance Life Insurance and Reliance Asset Management Company. Bajaj Finserv holds 74% in Bajaj Allianz General Insurance. Max India operates Max New York Life India insurance business. Religare operates AEGON Religare Life Insurance Company. IDFC operates IDFC Asset Management Company.

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