The Hindu Business Line

FPIs pump ₹6,780 cr into insurance stocks

The sector witnessed significan­t deals in primary, secondary markets during March


Bolstered by strong growth in premium collection and attractive share price valuations, foreign portfolio investors (FPIs) pumped in a record net investment of about ₹6,780 crore in insurance equities (stocks) during the first half of March 2019.

According to latest available data on sector-wise FPI investment­s, insurance sector received the highest inflow from FPI funds in March 2019 which is also the highest monthly inflow for the sector since March 2018 when it was listed in sector-wise FPI investment data.

“FPI flows should be seen in the context of fundamenta­l performanc­e, price performanc­e and overall market flows. In terms of fundamenta­ls, both the life and non-life segments have shown strong growth in premium till February 2019,” said Shilpa Kumar, MD & CEO, ICICI Securities.

Besides the surge in FPI inflows, the insurance sector also witnessed significan­t deal activities in both primary and secondary markets in March 2019. UK-based insurer Prudential Corporatio­n pared 3.7 per cent of its stake in ICICI Prudential Life Insurance through an offer-for-sale (OFS) transactio­n valued at about $200 million.

Prior to that, Standard Life reduced its stake in HDFC Life Insurance by 4.93 per cent through an OFS.

BNP Paribas Cardif, the joint venture partner in SBI Life Insurance, also offloaded 5 per cent of its stake in the life insurance company through a block deal worth about ₹3,000 crore


Noting that insurance is one of the high-growth sectors in the current economy, Kumar said, while private life insurers reported over 20 per cent year-on-year (y-o-y) growth in annual premium equivalent (APE), nonlife insurers (ex-standalone in March health players) recorded an overall growth of 13 per cent on y-o-y basis. Companies in the health insurance business are growing at a rate of 40 per cent, she added.

“Overall, we are seeing renewed interest in insurance paper with participat­ion from investors across geographie­s and categories, such as FPIs (longterm), sovereign wealth funds, alternate asset managers, and mutual funds,” Kumar said.

Although FPIs have been net sellers for most part of the FY19, they closed the financial year as net buyers with net investment of ₹51,200 crore in equities and ₹5,964 crore in bonds between February and March 2019.

“Improving global liquidity plus stable interest rates and recent opinion polls predicting the ruling party returning to power are the two factors responsibl­e for FIIs’ optimism about Indian markets,” said Naveen Kulkarni, Head of Research, Reliance Securities.

“Slowdown in global growth, change in global central banks’ stance from hawkish to dovish, and no possibilit­y of rate hike in the US are reasons why India looks like an oasis in the desert for FPIs,” said VK Sharma, Head PCG & Capital Markets Strategy, HDFC Securities.

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