ULIPS impact on Indian equity market can be larger than expected as finance ministry as maintained status quo, SEBI, IRDA to jointly approach court on ULIP jurisdiction so there temporary relief. In the year last 2years collection in ULIPS scheme has been Rs.1, 35,000Crs and data point that Equity AUM of insurers stood at Rs4trillon (US$88bn), 34% of total, as of December 2009.
ULIPS scheme has been in controversy as many products has been sold on assured return by intermediaries as incentive for them was highest compared with any schemes and ULIPS didn’t have easy entry and exit policy and huge sum of money was deducted towards many charges and now everyone has woken up after every long time but the ultimate suffer being the end user or investor. ULIPS scheme has the highest AUM invested in stock market and lacks transparency in scheme has led to many not renewing the policy and it's reflection in 2009 we had Rs.90,000crs as collection in 2010 till Feb only Rs.45,000crs has been collected and now FM has said he doesn’t want entry load for any financial product which means collection can drop more.
“Insurers say a ban on sale and renewal of ULIPS sold by all insurance companies would have led to the bulk of the Rs 75,000 crore investments in the stock markets being withdrawn”.
Equity Market Impact:
1) ICICIBANK, SBIN, HDFC, KOTAKBANK, REL.CAPITAL are few stocks where valuation will take a hit and ICICIBANK has started to correct fast.
2) Many investor who were confused till recently now will be aware they were mis-sold and this will lead to more maturity which in turn lead to profit booking by insurance companies
3) Liquidity driven market, RBI credit policy on 20/April and ULIPS controversy has given heavy weight Banking stock some selling pressure.
Nifty till now from the low of 4675 43trading days has happened and 2days has been maximum correction so 3rd correction and close below 5260 would be a worrying factor for long side traders in days to come.
http://www.moneycontrol.com/news/business/want-all-financial-products-to-move-to-39no-entry-load39-fm_451539.html Want all financial products to move to 'no-entry load': FM
Experts suggest that investors must stay away from the controversial products — at least because it costs more for you to put your money in ULIPs. “You should not invest primarily because the cost structure is very high and then it also does not offer flexibility to exit if your fund manager is a non-performer,”. However, experts say if your money is already stuck in a ULIP offer, you may be advised to stick with it for 15 years. http://www.hindustantimes.com/rssfeed/markets/Avoid-ULIPs-say-experts/Article1-530418.aspx
http://www.reuters.com/article/idUSTRE63C26320100413 (Reuters) - U.S. private-equity firm Kohlberg Kravis Roberts & Co (KKR.AS) is in talks to buy a controlling stake in Indian back-office service provider Firstsource Solutions (FISO.BO), three sources with direct knowledge of the matter said.
http://www.reuters.com/article/idUSTRE63C26320100413 (Reuters) - U.S. private-equity firm Kohlberg Kravis Roberts & Co (KKR.AS) is in talks to buy a controlling stake in Indian back-office service provider Firstsource Solutions (FISO.BO), three sources with direct knowledge of the matter said.
http://www.myiris.com/newsCentre/storyShow.php?fileR=20100405160741194&secID=fromnewsroo%20&secTitle=From%20the%20News%20Room&dir=2010/04/05 Long-term value picks: 3i Infotech, FSL, Glenmark
