GST Cut on Insurance: Will Premiums Really Fall?

Niva Bupa stock surges on GST speculation

Niva Bupa Stock Soars 47% in Three Days Amid GST Speculation; Company Issues Clarification

GST Cut on Insurance: Will Premiums Really Fall? Shares of Niva Bupa Health Insurance Company Ltd have surged for the third straight session, climbing 11.14% to a high of Rs 109.41 on Thursday. This marks an impressive 46.96% rise over just three trading days. The spike followed reports suggesting a possible reduction in GST on health insurance premiums, prompting exchanges BSE and NSE to seek clarification from the company.

In response, Niva Bupa stated that it has not received any official communication regarding changes in GST rates and cannot confirm the news beyond what has appeared in media reports.

The trading volume on the BSE was notably high, with around 20.01 lakh shares exchanged, significantly surpassing the two-week average of 8.65 lakh shares. The turnover reached Rs 20.59 crore, and the company’s market capitalization stood at Rs 18,206.32 crore. Buy orders significantly outnumbered sell orders, with 18,206.32 buy orders compared to 2,74,793 sell orders.

Niva Bupa’s stock made its debut on Dalal Street on November 14, following its IPO from November 7 to 11, which was priced between Rs 70-74 per share and subscribed 1.80 times. The IPO raised Rs 2,200 crore, including Rs 800 crore from a fresh share sale and Rs 1,400 crore from an offer for sale (OFS) of 189.19 million shares.

Founded in 2008, Niva Bupa is a joint venture between the Bupa Group and Fettle Tone LLP. It offers health insurance solutions through its mobile app and website. As of November 13, 2024, the company’s promoters held a 55.98% stake in the firm.

GST Cut on Insurance: Will Premiums Really Fall? Stock Market Holidays in December 2024: NSE and BSE to Close on Christmas Day

GST Cut on Insurance: Will Premiums Really Fall? As the year draws to a close, stock market investors are keen to know the remaining trading sessions in 2024. According to the official list of stock market holidays, the only holiday in December 2024 is on 25th December for Christmas. Trading on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) will remain suspended that day.

Since December includes four Saturdays (7th, 14th, 21st, and 28th) and five Sundays (1st, 8th, 15th, 22nd, and 29th), the markets will be closed on weekends as well. In total, the markets will remain closed for 10 out of 31 days, leaving 21 trading sessions for the month.

Stock Market Holidays in 2024

Initially, the BSE and NSE announced 14 stock market holidays for 2024. However, additional closures were declared:

1. 22nd January 2024 for the ‘Pran Pratishtha’ ceremony at Ayodhya’s Ram Mandir.
2. 20th May 2024 for Lok Sabha Elections in Mumbai.
3. 20th November 2024 for Maharashtra Assembly Elections.

These added holidays bring the total to 17 holidays in 2024.

Recent Market Performance

GST Cut on Insurance: Will Premiums Really Fall? Despite a U.S. stock market holiday, Indian indices rallied at the end of November. The Nifty 50 gained 208 points, closing at 24,122, while the BSE Sensex rose 699 points to end at 79,743. The Nifty Bank also advanced by 117 points, closing at 52,023.

Mid-cap and small-cap indices continued their upward momentum, with the Nifty Mid-cap 100 up 0.16% and the Small-cap 100 rising 0.75%. Notably, Adani Group stocks—Adani Green Energy, Adani Energy Solutions, and Adani Total Gas—jumped as much as 23% following their inclusion in the F&O segment on 29th November 2024.

BSE Share Price Surges 13%, Crosses Rs 5,000 Mark for the First Time, Up 130% YTD

Shares of the Bombay Stock Exchange (BSE) soared by 13% on December 5, 2024, breaking past the Rs 5,000 mark for the first time. Initially, the stock hit its 10% upper circuit at Rs 5,029.25, prompting the limit to be raised to 15%, setting the new threshold at Rs 5,257.85. By 11:33 AM, the stock was trading at Rs 5,059.15, up 10.61% from its previous close of Rs 4,572.05.

BSE’s Remarkable Growth

BSE’s shares have skyrocketed 90% over the past six months and over 130% year-to-date (YTD). Over the last five years, it has delivered extraordinary multibagger returns of 2,950%. A modest investment of Rs 10,000 five years ago would now be worth nearly Rs 3 lakh.

Technical Analysis

The stock is exhibiting a robust uptrend, with a clear pattern of higher highs and higher lows. Trading volumes have surged in recent weeks, indicating growing investor participation. BSE shares are currently trading above the 20, 50, 100, and 200-day moving averages, all trending upward, which underscores bullish sentiment. The Relative Strength Index (RSI) across daily, weekly, and monthly charts remains in positive territory, signaling strong momentum.

Why Are BSE Shares Rising?

Investor enthusiasm is partly fueled by speculation surrounding a potential IPO by the National Stock Exchange (NSE). If NSE goes public, it would be required to list its shares on BSE, as it cannot list on its own platform. This anticipation has sparked optimism about BSE’s growth prospects, especially in the derivatives market, with the potential NSE listing serving as a catalyst for further re-rating of BSE’s stock.

BSE’s continued expansion in the derivatives segment and the prospect of an NSE IPO have combined to boost investor confidence and drive the stock’s impressive rally.

BSE Ltd Stock Hits All-Time High, Signaling a Compelling Investment Opportunity

On December 5, 2024, BSE Ltd, a prominent player in the finance and NBFC sector, achieved a new record high in its stock price. Renowned stock analysis platform MarketsMOJO has issued a ‘Buy’ recommendation for the stock, highlighting its potential as a sound investment. BSE Ltd has been recognized as part of the Hidden Turnaround category since May 11, 2023, and the Reliable Performers list since November 13, 2023. Additionally, it was added to the MOJO Stocks list on August 28, 2024.

Stock Performance Highlights

BSE Ltd’s stock is trading near its 52-week high of Rs 4,989.80, surpassing sector performance by 8.41% today alone. It has consistently stayed above its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, reinforcing its strong upward momentum.

Over the past year, the stock has delivered a stellar 103.69% return, far outpacing the Sensex, which gained 16.44% in the same period. This substantial outperformance underscores the company’s robust growth trajectory and market resilience.

Investment Outlook

With its impressive track record, BSE Ltd emerges as a compelling option for investors seeking exposure in the finance and NBFC sector. Its consistent upward trend, strong fundamentals, and market dominance position it as a reliable choice for long-term investment strategies.

GST Cut on Insurance: Will Premiums Really Fall? This comprehensive article highlights the complexities surrounding the proposed reduction in GST rates on health and life insurance policies from 18% to potentially 5%. While a GST reduction may seem beneficial on the surface, industry experts warn that it might not yield the expected decrease in insurance premiums unless certain conditions are met, specifically regarding the input tax credit (ITC).

Key Points:

1. Current GST Framework: Insurance premiums are taxed at 18% GST, with insurers currently able to claim ITC, which helps offset costs.
2. Impact of Lower GST Without ITC:
   • If GST is reduced to 5% without allowing ITC, insurers could face increased operational costs due to the inability to offset taxes on inputs like IT services and office rentals.
   • This could paradoxically lead to higher premiums, nullifying the benefit of a lower GST rate.
3. Proposed Solutions:
   • A 12% GST rate with ITC could balance affordability for policyholders, financial sustainability for insurers, and revenue considerations for the government.
   • Alternatively, a 5% GST with ITC retention would be essential for ensuring premiums remain competitive.
4. Government’s Perspective:
   • GST on insurance generates significant revenue (₹16,000+ crore in FY 2023-24), making a drastic reduction fiscally challenging.
   • Experts suggest that a complete GST exemption is unlikely, but a reduction aligned with maintaining ITC could be politically and economically feasible.
5. Challenges with Full GST Exemption:
   • Eliminating GST entirely could result in increased costs for insurers due to the loss of ITC on operational expenses, thereby still raising premiums.

Conclusion:

GST Cut on Insurance: Will Premiums Really Fall? A nuanced approach is essential—potentially a GST reduction to 12% with ITC intact—to balance affordability, insurer viability, and government revenue. Without ITC, even a drastic GST cut may fail to benefit policyholders and could inadvertently increase premiums. The upcoming GST Council meeting on December 21 will likely address these concerns, providing a clearer picture of the path forward for insurance taxation in India.