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Insurance companies and the National Pension System (NPS) have emerged as major sources of domestic liquidity in Indian equities
Record Rs1 lakh crore equity infusion by insurance and pension funds underscores deepening domestic participation
Insurance companies and the National Pension System (NPS) have emerged as major sources of domestic liquidity in Indian equities, collectively investing over Rs 1 lakh crore so far in 2025 — the highest ever contribution by these segments in a single year. This surge in equity inflows has come despite muted stock market returns through the year.
Data shows that insurance firms have deployed Rs 56,821 crore in equities in 2025 to date, while NPS investments stand at Rs 51,308 crore — both record highs. These figures mark a sharp increase from their 2024 investments of Rs 23,062 crore and Rs 13,328 crore, respectively.
According to Saurabh Jain, Head of Fundamental Research at SMC Global Securities, the rise in investments from insurance and NPS funds stems from regulatory flexibility, growing assets under management (AUM), and the pursuit of better returns amid subdued debt yields.
Over the past few years, the Pension Fund Regulatory and Development Authority (PFRDA) has permitted greater equity exposure — up to 75% for Tier-I accounts and 100% for Tier-II accounts — allowing pension managers to capture more of India’s growth opportunity. Similarly, the Insurance Regulatory and Development Authority of India (IRDAI) has enabled insurers to allocate a larger share of their corpus to equities within prudential limits, while still maintaining significant holdings in government and approved securities.
Vineet Agarwal, Head of Insurance at PL Capital, noted that liberalised norms, including higher FDI caps and improved solvency ratios, have allowed insurers to pursue more growth-oriented strategies. Consistent premium inflows, better policyholder retention, and overall economic stability have encouraged long-term domestic investors to treat equities as a core asset class, shifting from conservative allocations to active market participation.
Under current guidelines, NPS investors below 50 years of age can invest up to 75% in equities under the Active Choice option, with exposure gradually reducing as they age. Auto Choice funds, meanwhile, maintain 25–75% equity exposure depending on the risk profile, with a 5% cap on alternative assets. Insurers, governed by IRDAI norms, adhere to exposure caps by sector and company, with recent relaxations allowing higher participation in equities — particularly in BFSI and infrastructure sectors.
Akshat Garg, AVP at Choice Wealth, observed that domestic long-term investors have become steady buyers as foreign investors remain cautious, reflecting confidence in India’s macroeconomic outlook. Rising household savings through insurance and pension products, coupled with the growing popularity of market-linked options like ULIPs and NPS schemes, are fueling sustained inflows.
The strong showing from insurance and pension funds complements robust mutual fund activity — which has seen Rs 4.44 lakh crore invested in equities so far in 2025, compared to Rs 4.15 lakh crore in 2024.
In contrast, banks and domestic financial institutions have been net sellers. Banks have sold equities worth Rs 16,941 crore, while financial institutions offloaded Rs 158 crore in 2025 — compared with Rs 10,132 crore and Rs 347 crore of net selling, respectively, a year earlier.
Overall, domestic institutional investors (DIIs) — including banks, financial institutions, insurers, and NPS — have collectively invested Rs 6.29 lakh crore in Indian equities so far this year, up from Rs 5.22 lakh crore in 2024.
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More
November 11, 2025, 07:59 IST
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