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Insurer & NPS Equity Bets Plummet 45%
15 Oct
Summary
- Insurance and NPS funds reduced equity investments by 45%.
- Higher bond yields and falling stock prices drove the shift.
- Mutual funds continued significant investments in equities.
Insurance companies and National Pension System (NPS) funds saw a substantial 45% reduction in their combined investments in Indian equities during the September quarter. Their investments dropped to ₹22,714 crore from ₹41,465 crore in the prior quarter. This marks the steepest quarterly decline in five quarters, influenced by rising bond yields and decreasing stock values.
This strategic pivot towards debt instruments was also influenced by accounting treatments that stabilize solvency measures. While insurance companies invested approximately ₹8,013 crore and NPS funds around ₹14,700 crore in equities, their overall allocation shifted. In contrast, mutual funds continued to be major equity investors, injecting ₹1.09 lakh crore into the market during the September quarter.
The decline in NPS investments from the previous year is partly due to a higher base effect. Following guideline changes in March 2025 that increased equity allocation caps, pension funds rebalanced their portfolios. Despite the recent dip, insurers and NPS funds remain key domestic liquidity providers for Indian equities.
