Insurance, NPS equity investments plunge 45% to Rs 22,714 crore in September quarter
Insurance companies and NPS funds have decreased their combined investments in Indian equities by 45%. They invested ₹22,714 crore in the September quarter, compared to ₹41,465 crore prior. Higher bond yields and declining stock prices have shifted their focus towards debt instruments. Mutual funds, on the other hand, continue to invest heavily in equities this quarter.
In the September quarter, combined investments from insurance companies and National Pension System (NPS) funds into Indian equities fell by a substantial 45%, dropping to ₹22,714 crore from ₹41,465 crore in the previous quarter, according to National Stock Exchange data. This was the most significant decline in their combined quarterly investments over the past five quarters.
Insurance companies contributed around ₹8,013 crore towards equities while NPS investments amounted to around ₹14,700 crore. Subhasis Ghosh, CEO of Kotak Mahindra Pension Fund, noted that the decline can be attributed to market weakness and a trend of investors shifting towards debt investments. Mutual funds were the dominant force in domestic institutions, with ₹1.09 lakh crore invested in equities during the quarter compared to ₹1.42 lakh crore in the previous period.
Higher bond yields and falling stock prices encouraged domestic institutions to opt for higher allocations to debt instruments in their portfolios. Elevated bond yields made debt investments more attractive amid a decline in stock prices, which reduced the value of insurers' existing equity holdings and affected their capital cushion for potential policyholder claims.
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