Is insurance sector worth enough to invest at this point of time? Opinion inside
- ShareSansar, June 19, 2016 on Experts Speak , Featured , Latest , Stock Market
The charm towards insurance sector has increased in secondary market. Insurance index reached a height of 9,345.88 points within a very short span. On Baisakh 2nd the sub index was only 6143.62 levels. In the span of last one month time period, the prices of 13 non life listed insurance scrips and 7 life insurance scrips has enhanced by 50% and above. Now it is worth pondering if the sector still has more charm in the short run?
Here is the opinion of our experts regarding the growth of the Insurance Sector from this point of time in context of secondary market price.
CEO, NMB Capital Limited
The insurance sector is significantly bullish but I think it will not substantiate. The paid up capital increment thing has pushed the insurance sector up and if investors are making long term investment than no one can say what happens in long term?
The insurance sector will grow only if the insurance companies can expand their business in the direct proportion to the increased paid up capital.
I don’t see the last week’s growth justifiable. Though it may not impact the old invests, however, the situation seems quite scary for new investors. Same applies for the insurance sector. Right shares have been boosting price exponentially, though it is only a way to raise capital and company will only benefit after using the fund. Thus there is no significant logic behind why price should rise immediately after right shares. Rather FPO is handy in this matter as it increases the reserves and surplus of the organization and enhances its ability to invest and generate profit.
Though many of them are saying insurance sector and non-life in particular will be generating more profits in upcoming reports as it has been compulsory as marked by the budget and government initiatives to buy insurance schemes under various subjects which will benefit insurance companies greatly. However, as many of them are saying all non life insurance share price should go beyond 2000 per share isn’t rational.