LIC, HDFC Life, SBI Life: Budget 2023 proposals dismantle bullish trends

The announcement of taxing insurance proceeds of over Rs 5 lakh premium in the Budget 2023, sent Insurance stocks on a downward spiral on Wednesday.  In the previous budget, exemptions were curbed in unit-linked insurance policies where proceeds exceeded Rs 2.5 lakhs.

Listed players in insurance segment such as ICICI Prudential Life Insurance Company, HDFC Life Insurance Company, and Max Financial Services tanked over 10 per cent, while SBI Life Insurance Company and  Life Insurance Corporation of India tumbled close to 9 per cent on Wednesday.

Since the last budget, the overall trend in these stocks has not been attractive, as most are trading close to their January 2022 levels. But, Life Insurance Corporation of India, which went public in May last year, trades 65 per cent lower from the debut price.

Technically, prior to this announcement, the price structure of SBI Life Insurance Company and Max Financial Services were highlighting a bullish sentiment and were on the verge of the next up move. 

On Thursday, shares of Max Financial Services and HDFC Life Insurance Company plunged over 5 per cent, while SBI Life Insurance Company, Life Insurance Corporation of India and ICICI Prudential Life Insurance Company traded with subdued sentiment. 

Here’s the technical outlook of listed insurance players amid new tax regime:-

Max Financial Services Limited (MFSL)

Outlook: Trend looks weak, may test Rs 650

Post forming an “Inverse Head and Shoulder” on the daily chart, the stock witnessed a sharp upside which was in a process to surpass the barrier of Rs 885 that it failed to conquer since August last year.  While the current price trades close to the earlier breakout mark, sentiment is not supporting the positive bias, as the technical oscillator, the Moving Average Convergence Divergence (MACD) made a negative crossover above the zero line, implying momentum to shift in bears’ side if the price action fails to revive.

The immediate hurdle comes to Rs 780. Support stands at Rs 650 levels, where the stock is likely heading.  CLICK HERE FOR THE CHART

SBI Life Insurance Company Limited (SBILIFE)

Outlook: Selling pressure in the range of Rs 1,150 to Rs 1,200

On a broad perspective, the SBI Life Insurance Company shares have breached the neckline of Rs 1,150 level, suggesting a negative breakdown. If the stock fails to quickly rebound, the price action may lead towards Rs 1,000 and Rs 950 levels.  On the upside, the stock now needs to decisively overcome the sell-off it is likely to experience in the range of Rs 1,150 to Rs 1,200 levels.  CLICK HERE FOR THE CHART

HDFC Life Insurance Company Ltd (HDFCLIFE)

Outlook: Trend to see more downside, if fails to rebound

Following the breakdown of Rs 650 in 2021, the stock could not make a decent comeback. Moreover, the subsequent price action was not able to dismantle the sell-off it started to witness near Rs 625. At present, the stock fell beneath the reversal mark of Rs 488-Rs 489 touched in March last year, reflecting a negative bias. The trend is weak and further downside towards Rs 450 and Rs 425 cannot be overruled. CLICK HERE FOR THE CHART

Life Insurance Corporation of India (LICI)

Outlook: staying below Rs 580 may trigger fresh sell-off

The stock has hit a new 52-week low of Rs 582.35 on Wednesday; signifying bearish sentiment is still present in the price action. Going ahead, every move towards Rs 650 is bound to see intensified sell-off. If the stock manages to overcome this hurdle, it has to next face-off bears at Rs 700 levels.  Sustaining beneath Rs 580 may open doors for Rs 520 and Rs 500 levels. The MACD has fallen under the zero line implying build-up of a negative momentum, as per the daily chart. CLICK HERE FOR THE CHART

ICICI Prudential Life Insurance Company Ltd (ICICIPRULI)  

Outlook: Breached crucial support levels.

ICICI Prudential Life Insurance Company shares have conclusively broken the support range of Rs 440 to Rs 425, as per the weekly scale. This reflects an adverse bias, which confirms more decline as the counter trades beneath the crucial weekly moving average (WMA) of the 200-WMA, currently set at Rs 485-mark. The trend is pessimist, with short-to-medium term outlook revealing weak stance. The next support is between Rs 350 - Rs 330 range. CLICK HERE FOR THE CHART