By Kiran Jani
The equity market experienced a drop in December 2024, with Nifty50 down by 3.95% and the Dow Jones declining by an even sharper 5.82%. On the other hand, commodities remained resilient, providing a glimmer of hope amid the global turbulence. Gold remained flat to slightly positive, while crude oil surged by a remarkable 13%, demonstrating its status as a hedge against market volatility.
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Amidst the continued bearish sentiment in January 2025, the spotlight is turning toward the Union Budget 2025. There is optimism that the government may introduce further measures to bolster the insurance sector. I believe the contrary play in the current budget will be the Insurance sector, and two insurance stocks that could be in focus are SBI Life Insurance and GIC (General Insurance Corporation of India). Let’s dive deeper into their performance and potential prospects.
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Since 2022, SBI Life Insurance has delivered a moderate cumulative return of 31%, translating to an annualised return of approximately 10%. While the journey has been steady, the technical charts now suggest the potential for significant upside.
Source: Investing.com
Technical Observations:
- Rounding Bottom Breakout:
The stock recently completed a rounding bottom pattern, signalling a reversal from its prior downtrend and indicating strength at current levels.
- Falling Channel Breakout:
SBI Life has broken out of a falling channel, a classic bullish signal that suggests the end of short-term selling pressure.
- Bullish RSI Divergence:
The 14-period RSI exhibits a three-bar bullish divergence, where prices make lower lows while the RSI makes higher lows, a strong precursor to upward momentum.
Price Action and Outlook:
The stock corrected sharply from ₹1,930 to ₹1,380 over the past four months. However, this retracement aligns with significant support levels,
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