3 PSU Insurance Shares Rise By 10-40% In 5 Sessions: LIC, GIC Re, NIACL, What's Driving Bulls Here?

Public sector undertakings-led three insurance stocks have skyrocketed in the past five trading sessions. Two of them have even touched new 52-week highs. In the trading week that ended on November 24th, the largest life insurer stock LIC gained by over 10%, while government-backed general insurance stocks like GIC Re and NIACL also zoomed by over 19% and 39% respectively. The bullish drive in these 3 stocks is due to the industry growth outlook to "positive" from "stable".

LIC Share Price:

On November 24th, LIC shares ended at Rs 677.70 apiece, up by 9.8% on NSE. The stock's weekly gains are around 10.3%.

LIC who also holds many stocks publicly, has trimmed its shareholding in two stocks namely Engineers India and Dr Reddy's Lab respectively last week.

In Engineers India, LIC decreased its shareholding from 2,89,70,343 to 1,75,46,621 Equity Shares -- taking its stake from 5.155% to 3.122% of the paid-up capital. Meanwhile, in Dr Reddy's Lab, LIC reduced its shareholding from 1,27,20,873 to 93,28,967 Equity Shares, hence bringing its stake down from 7.627% to 5.593% of the paid-up capital of the pharma company.

General Insurance Corporation Of India (GIC Re) Share Price:

This stock ended at Rs 304.45 apiece, up by 15.5% on NSE on Friday, after hitting a new 52-week high of Rs 316 apiece during trading hours. GIC Re stock has rallied by at least 19.4% from November 20th to 25th.

In its regulatory filing, GIC Re announced that the A M Best has re-affirmed the existing ratings & additionally assigned an India National Scale Rating (NSR) to the company. A M Best revised its outlook to positive from stable on GIC Re's financial strength rating at 'B++', while the outlook was upgraded to positive from negative on the long-term issuer credit rating at 'bbb+', and a stable outlook was allotted on NSR.

The New India Assurance Company (NIACL) Share Price:

NIACL share price froze at 20% upper circuit at Rs 209 apiece on NSE after market hours of Friday. This would also be its new 52-week high. Meanwhile, its weekly gains come to around 39.2%, the most upside compared to the other two PSU insurers.

NIACL is in focus as it has scheduled an analyst institutional investors meeting with senior management of the company to be held in Mumbai on November 29, 2023. The management will be represented by Neerja Kapur, CMD and other top-level management.

What's driving bulls in PSU insurance stocks, and what to expect ahead?

Prashanth Tapse, Senior VP (Research), Mehta Equities said, "Despite muted markets, PSU Insurance shares LIC, GIC and New India Assurance surging up after long haul mainly on the back of reports stating that industry growth outlook to "positive" from "stable". LIC has also projected double-digit growth over the last year and plans to launch new attractive products. New India Assurance zooms after the insurer said analysts and institutional investors will meet senior management in Mumbai on November 29."

Tapse further said, "GIC shares are also in demand after the company said that AM Best re-affirmed the existing ratings and additionally assigned India National Scale Rating (NSR) to the company. We are expecting rerating in the sector."

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