ULIP spat unlikely to impact equity mkt: Analysts

NEW DELHI: The turf war between two sectoral regulators SEBI and IRDA over equity-linked insurance scheme (ULIPs) is unlikely to impact the stock market in a big way even as insurance companies would not hardsell the products, analysts said. "There will not be any big impact on markets due to this controversy as April is considered as lean month for insurance companies," Bonanza Portfolio Vice President (Equities) R L Narayanan said. ULIPs -- one of the most common insurance plans sold by life insurers, where the money collected from consumers is invested into equity and debt markets and returns are linked to the same -- have become a bone of contention between the two financial sector regulators, with both claiming authority to regulate these schemes. On Friday, capital markets regulator SEBI had banned 14 life insurance companies from selling ULIPs, without its approval. The companies which come under the ban include Reliance Life, SBI Life, ICICI Prudential, Tata AIG and HDFC Standard Life, "The market has got enough time to digest the development in the ULIP issue and there are less possibility of any impact in coming trading sessions," SMC Capitals Equity head Jagannadham Thunuguntla said.

Marketmen said the spat between the two regulators for control of ULIP is not new and investment in equity market would not be affected largely because of this. "We expect the issue to be sorted out in a week's time. there is no concern of insufficient liquidity in stocks even if ULIPs are not the main driver of Dalal Street," Narayanan said. Meanwhile, Insurance Regulatory and Development Authority (IRDA) has asked the 14 insurance companies to ignore the ban imposed by SEBI, and asked the companies to continue their business as usual. ULIPs account for over 50 per cent of the total life insurance business in the country.