HDFC Life Insurance shares jump 8% at open; here's what fuelling the upward move

Shares of HDFC Life Insurance Company Ltd rose sharply in opening trade on Monday. The stock jumped 8.05 per cent to hit a day high of Rs 554.60 over its previous close of Rs 513.30. The sharp movement in share price came after the Reserve Bank gave its nod to HDFC Bank and HDFC to raise their stake in the private insurer.

"We wish to inform you that HDFC Ltd has informed the stock exchanges on April 21, 2023, that HDFC Bank has received a letter dated April 20, 2023, from Reserve Bank of India (RBI) on certain forbearances sought by it, in relation to the ongoing Scheme. HDFC Bank, basis the same, has made a disclosure to the stock exchanges. We further wish to draw your attention to 'Point No 2' as mentioned in the said announcement made by HDFC Bank, which inter alia states as below: 'The RBI has permitted HDFC Bank or HDFC Ltd to increase the shareholding to more than 50 per cent in HDFC Life Insurance Company Ltd, prior to the effective date'," HDFC Life stated in an exchange filing.

RBI's approval for the merger of HDFC in HDFC Bank, granting some of their important requests (which included raising a stake in HDFC Life) would facilitate the amalgamation process by July, said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

A total of 4.64 lakh shares changed hands on BSE today, which was more than five times compared to the two-week average volume of 89,000 shares. Turnover on the counter stood at Rs 25.29 crore, commanding a market capitalisation (m-cap) of Rs 1,15,164.64 crore.

At today's high price of Rs 554.60, the stock traded 21.11 per cent higher from its 52-week low level of Rs 457.95, hit on March 16, 2023. Yet, the counter has slipped 10.65 per cent from its one-year high of Rs 620.70, a level seen on January 6 this year.

Support on the counter could be seen at Rs 513.30, followed by Rs 500 level. AR Ramachandran from Tips2trades said, "The stock looks bearish on the daily charts with strong resistance at 555. A daily close above this resistance could lead to targets of Rs 575-620 in the near term. Support will be at Rs 513.30."

Ravi Singh, Vice-President and Head of Research at Share India, "As per the data released by the Life Insurance Council, HDFC Life along with Max Life, ICICI Prudential and SBI Life witnessed high growth in their new business premiums for March. In addition, RBI's nod is considered to be positive. On technical setup, the stock is in an uptrend and may touch the level of Rs 580 in the near term."

Ravi Singhal, CEO at GCL Broking, "The stock has good support near Rs 500. So, till it is trading above Rs 500, all looks good."

The stock was last seen trading higher than the 5-day, 20- and 50-day moving averages but lower than the 100-day and 200-day moving averages. The counter's 14-day relative strength index (RSI) came at 64.09. A level below 30 is defined as oversold while a value above 70 is considered overbought.

HDFC Life has an average target price of Rs 680, Trendlyne data showed, suggesting a potential upside of 26.12 per cent. The scrip has a one-year beta of 1.01, indicating average volatility.

Meanwhile, Indian equity benchmarks gave up their opening gains and slipped into the red as losses in pharma, automobile and technology stocks countered gains in banks, financials and energy shares.

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