PB Fintech falls sharply as IRDAI proposes changes

Policybazaar parent PB Fintech is under heavy selling pressure today after IRDAI released a consultation paper proposing major changes in insurance distribution. The main concern is lower commission limits for distributors, along with tighter expense limits and more transparency in commissions. IRDAI has also proposed restrictions on selling insurance along with loans. These are proposals at present, so the final impact will depend on the rules that are eventually approved. PB Fintech is being hit harder because Policybazaar earns a major part of its business from insurance distribution. If commissions are reduced, the company could earn less from each policy, which may put pressure on revenue and profit margins. Other insurance-related stocks such as HDFC Life, SBI Life, ICICI Prudential Life and Max Financial are also under pressure. Outlook: The chart has turned weak. The stock has broken below the 10, 20, 50, 100 and 200-day moving averages. RSI is around 30, showing an oversold zone, while MACD has also turned negative. A short-term bounce is possible from oversold levels, but the trend will remain weak until the stock starts recovering above important moving averages. My View: The fall is mainly due to uncertainty over future commission income. Since the changes are still proposals, the final impact will be clearer after the consultation process. Disclosure: I or my family don’t have any financial interest in the stock. Disclaimer: This content is for educational purposes only and should not be considered investment advice.