Insurance scrips end in green after FM proposes FDI cap hike

Shares of insurance companies ended with gains up to five per cent after Finance Minister Arun Jaitley today proposed raising the Foreign Direct Investment (FDI) cap from 26 per cent to 49 per cent.
Religare Enterprises surged 4.79 per cent, while Reliance Capital settled 2.55 per cent higher on the BSE.
Among others, Aditya Birla Nuvo was up 2.41 per cent, Bajaj Finserv gained 1.90 per cent, HDFC (0.91 per cent) and Max India (0.63 per cent).
"FDI in insurance sector has been proposed to be increased to 49 per cent with full Indian management and control under the FIPB route. These may not exactly be in line with industry expectations but the attempt to provide funds for the capital intensive industry needs to be acknowledged," said Anish Thacker, Tax Partner, Ernst & Young.

In a big relief to the capital-starved private insurance sector, Jaitley today proposed raising the FDI cap.
"The insurance sector is investment starved. Several segment of insurance sector need an expansion. The composite cap of the insurance sector is proposed to be increased to 49 per cent from the current level of 26 per cent with full management and control through the FIPB route," he said while presenting the Budget for 2014-15.

The move would help insurance firms to get the much needed capital from overseas partners.
"Increased FDI in insurance is a welcome step," said Ajay Bodke, Head - Investment Strategy & Advisory, Prabhudas Lilladher Private Limited.

Meanwhile, in the broader market, the benchmark Sensex ended 72.06 points down at 25,372.75.