Insurance Companies Cautious As Equity Markets Reach Old Peaks in India

Insurance Companies Cautious As Equity Markets Reach Old Peaks in India

The equity market in India is very near the peaks it had scaled before the downturn happened in 2008. The insurance companies in India, as is the case with a lot of markets, play a major participatory role in the equity markets and are trading very cautiously this time around.

There insurance companies are cautiously positive in the markets as of now. Life Insurance Corporation of India, which is the largest domestic institutional player is not all worried and is keeping a close watch on the foreign money inflows which are currently driving the markets. The company is booking profits in certain segments and is very cautious in increasing its exposure in some other segments. The company is of the view that though the valuations have been steep overall, there are still some value-buys which can generate good returns. LIC will invest upto 2 lakh crores in this financial year.

Other life insurance companies too are treading cautiously. Kotak life insurance feels, the market will taper off and lose some steam as the sensex approaches the 21,000 mark. The company would be very selective in picking its stocks and would not be a big buyer in the current markets. Future Generali Life Insurance, SBI life insurance and Bajaj Allianz life insurance are more or less following the same strategy and staying cautious.

The big factor would be the IPOs of the public sector companies like SAIL, ONGC and IOC which have been lined up in the coming few months. The government it seems would not do much to stem the flow of FII money which is leading to the small uncertainties in the current scenario. The government is looking to raise close to 40,000 crores through the sales of stakes in these PSU companies.

The insurance companies would see the maximum premium incomes in the coming few months and it would be very tough to keep the cash idle. Surely, the insurance companies are looking for clear signs on market movements.

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