Insurance stocks in focus: SBI Life surges despite weak market sentiments!

Shares of SBI Life Insurance Company zoomed nearly 4% on Wednesday’s trading session. With this, it has become the top gainer among the Nifty stocks.  

After consolidating in a range of Rs 1030- Rs 1100, the SBI Life Insurance stock has given a breakout from its upper range and has formed a strong bullish candle on the technical chart. It has recorded above-average volume today which is found to be greater than 10-day, 30-day and 50-day average volumes. Not only this, but the stock has also outperformed its peers today, namely, HDFC Life (+2.83%) and ICICI Prudential Life Insurance (+2.67%).  

Clearly, the insurance stocks have been enjoying a good ride despite weaker sentiments in the market. The companies have been able to post good quarterly numbers in Q4FY22. The shares of SBILIFE have risen about 8% since its prior swing low of Rs 1034. With this, the technical parameters have also seen a major improvement in stock’s strength. The 14-period daily RSI (56.63) has seen a good jump and is above its prior swing high, indicating strong strength in the stock. Recently, the MACD has given a bullish crossover and the stock is likely to produce a good upmove. The On Balance Volume (OBV) shows a similar pattern as RSI and indicates good strength from the perspective of the volume. The stock has surged above its 50-DMA today and is already above its 20-DMA.  

Considering the overall bullishness, the stock is expected to trade higher in the coming days. It has the potential to test the levels of Rs 1150 which is its 200-DMA level, followed by Rs 1200 levels in times to come. The downside risk seems to be limited considering strong bullish sentiment in the stock. It presents a good opportunity for swing trading, and traders can expect a decent profit in near future as per the technical analysis.