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Record ₹1.08 Lakh Crore Equity Inflow from NPS and Insurance Companies Despite Market Underperformance
Report: Insurance companies and the National Pension System have invested ₹1.08 lakh crore in the stock market so far in 2025, the largest investment in history. Insurance companies invested ₹56,821 crore and the NPS ₹51,308 crore. This investment is more than double the previous year. Experts say this move was driven by the pursuit of higher returns due to simplified regulations and increased asset holdings.
Domestic insurance companies and the National Pension System (NPS) have invested a record ₹1.08 lakh crore in the stock market so far this year. This is the highest investment ever from both these segments. Insurance companies have invested ₹56,821 crore in equities since the beginning of this year, and the NPS has invested ₹51,308 crore. This is significantly higher than the 2024 investments of ₹23,062 crore and ₹13,328 crore, respectively.
The market investment comes at a time when equities have underperformed this year. Analysts say that due to easing regulations and increased assets under management, insurance companies and NPS have invested in equities to achieve higher returns.
The Pension Fund Regulatory and Development Authority (PFRDA) has amended its regulations in recent years, allowing equity investments up to 75% for Tier-1 NPS accounts and 100% for Tier-2 accounts. Insurance companies have invested ₹56,822 crore, and NPS has invested ₹51,308 crore so far this year.
The exemption granted by the insurance regulator, IRDA, allowed insurance companies to maintain equity investments within limits while retaining a significant stake in government and approved securities. Other domestic institutional investors, such as mutual funds, invested ₹4.44 lakh crore in equities this year, up from ₹4.15 lakh crore last year. However, banks and some domestic financial institutions sold ₹16,941 crore and ₹158 crore, respectively.
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Amid heavy selling by foreign institutional investors, net buying by domestic institutional investors is supporting Indian markets. The strategy of foreign investors to continuously sell and invest in low-priced markets will continue. Indian corporate earnings for the second quarter of 2025-26 were better than expected. Mid-cap companies, in particular, saw a 14% year-on-year increase.
