Are insurance and banks likely to lose from the Union Budget as that appeared in the price fall post the budget announcement?

The big news in the budget was the decision (or rather the proposed decision) to sell a part stake in Life Insurance Corporation (LIC). As of now it is 100% owned by the government of India. Talks have been going on for some time now but the Budget has announced plans to sell stake in LIC and has also included the proceeds in the divestment target. It is surely going to be huge because the divestment target has been doubled to Rs.210,000 crore this year. This triggered declines in shares of private insurers like SBI Life, HDFC Life etc.

Banks were a different ball game altogether and they took a hit on disappointment that the recapitalization announcement did not come through. In the Budget, the finance minister was silent on infusing new capital into state-run banks for 2020-21. It may be recollected tha the government has already infused Rs.3,45,000 crore into PSU banks in the last five years. If the government does not inject fresh capital, this will be the first year under Modi when banks got zero allocation for recapitalization. Most of the marquee PSU banks like SBI, BOB, Canara Bank, Union Bank of India, Bank of India and Punjab National Bank could be impacted by the silence. Bank Nifty was also down nearly 1.5%.