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Indian stocks drop, insurance overhaul plan rattles financials

The Nifty Financial Services ex-Bank index slid 4.3%, while India VIX jumped nearly 23% as IRDAI proposed caps on customer acquisition and distributor commissions.

Reported · Written up by our desk · Emerging Markets

Indian equities fell sharply on Thursday, with the Nifty down 1.6% and the Sensex off 1.7%, both hitting their lowest levels since early April and June, according to LiveMint Markets. The sell-off was driven by a mix of higher oil prices, rising US Treasury yields, and a proposed insurance overhaul that raised concerns for financial-sector distribution models.

Brent crude pushed above $106 a barrel and US Treasury yields climbed to their highest levels in nearly 20 years, adding to risk-off sentiment across Asia. In other markets, the Shanghai Composite fell 1.2%, while Europe and US index benchmarks also declined.

In India, financial services took the biggest hit, after the Insurance Regulatory and Development Authority of India (IRDAI) moved to lower customer acquisition costs, revamp distributor commissions, enforce expense limits, and streamline intermediary categories. While the changes are intended to curb mis-selling and lower policyholder costs, industry executives warned that caps could disrupt distribution networks, squeeze lower-ticket products, and narrow consumer choice.

The sector’s weakness was reflected in the Nifty Financial Services ex-Bank index, which fell 4.3%, and the Nifty Mid-small Financial Services index, which dropped 4.4%. LiveMint Markets also noted that PB Fintech Ltd and Turtlemint Fintech Solutions Ltd, which operate in insurance distribution, fell 36% and 20% respectively, with India VIX rising nearly 23%.

Latest closeWTI crude $95.27 ▲3.4%|Brent $100.98 ▼2.0%|VIX 15.69 ▲3.4%

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