The insurance sector is in for some good news as the central government has proposed to increase foreign direct investment (FDI) limit in the insurance sector to 74 per cent.
Finance Minister Nirmala Sitharaman made the announcement during the presentation of the Union budget on Monday and soon the shares of companies related to the insurance sector jumped by up to 12 per cent.
The BSE benchmark Sensex zoomed over 1,700 points and the NSE Nifty reclaimed the 14,000-level driven by gains in financial stocks as experts have claimed that this year’s budget is a "growth-oriented" effort. Read more
The New India Assurance Company zoomed 11.85 per cent, General Insurance Corporation of India jumped 8.78 per cent and ICICI Prudential Life Insurance Company gained 6 per cent on BSE.
Further, HDFC Life Insurance Company gained 5.19 per cent, ICICI Lombard General Insurance Company gained 3.96 per cent and SBI Life Insurance Company 3.74 per cent.
"Raising FDI in insurance from 49 per cent to 74 per cent is welcome. Market response to the budget reflects growth optimism," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
The government on Monday proposed to increase FDI limit in the insurance sector to 74 per cent, a move aimed at attracting overseas players.
In the Union Budget 2021-2022, Finance Minister Nirmala Sitharaman also said investor charter would be introduced as a right of all financial investors across all financial products.
She proposed to amend the Insurance Act 1938 to "increase the permissible FDI limit from 49 per cent to 74 per cent in insurance companies and allow foreign ownership and control with safeguards".
(With PTI inputs)