New Delhi: Shares of life insurance companies were down 5-10% as finance minister Nirmala Sitharaman, while presenting the Union Budget on Saturday, offered a sharp reduction in tax rates for those who do not avail of any exemptions.

While shares of HDFC Life Insurance Company were down 5%, those of ICICI Life Insurance Company and SBI Life Insurance Company slumped 10% lower each. The Nifty 50 was down 1.7% at 11836.25 points.

“There is fear among investors that if a lot of people choose the new income tax regime, all these deductions will go. Many tax payers would use life insurance policies and ULIPS (unit-linked insurance plans) to fill their quota of deductions. This may not apply anymore," an official at a domestic brokerage house said, adding that even under the old tax regime, it seems about 70 deductions will no longer be allowed.

Two other factors that could weigh on life insurance companies’ stocks could be a decline in the broader market and the proposal of Life Insurance Corporation of India’s initial public offering made today.

Shares of general insurance companies, though weak, were in line with the decline in the benchmark index. Traders felt it was unlikely the government would do away with deductions for health insurance policies, while most general insurance policies are anyway not covered under these deductions, the official said.


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