That is right and HDFC Life did react very positively to the NSE announcing that HDFC Life would replace Vedanta in the Nifty 50 from July 31. Vedanta was anyways going as it had opted for delisting and secured approval on 25 June. SBI Life is also expected to enter the indices in place of Zee Entertainment, which has been vulnerable for some time now.

This is likely to result in net inflows because Vedanta has an estimated weight of 44 bps in the index, while HDFC Life is likely to have a weight of 90 bps. This is likely to result in ETF buying of Rs.820 crore. Zee and Bharti Infratel will be replaced by SBI Life and Divi Labs and this is also likely to result in net inflows and also improve the earnings profile.

Private life insurance sector has been growing at around 15% over last 17 years and currently they have 50% market share. The other half is still held by LIC and the penetration is just 5-6% as of now so the potential is limitless. Life insurance is one sector that has a high elasticity with GDP growth and that is one reason even the markets are betting on it.