Insurance firms step up stock purchases amid market swings

Domestic insurers, led by the Life Insurance Corporation of India (LIC), have stepped up their equity purchases amid relentless selling by foreign portfolio investors (FPIs). Since November last year, domestic institutional investors (DIIs) have shopped for equities worth Rs 1.53 trillion, of which roughly a third have been bought by insurers.

LIC alone accounts for about 70 % of the insurers’ flows, according to market watchers. This buying, combined with inflows from mutual funds (MFs), which have pumped in excess of Rs 1 trillion since November, has provided a semblance of stability to the market during periods of volatility. The indices have slid about 6.5 % since November.

“The life insurance industry has seen high double-digit growth with regular flows in the form of half-yearly or yearly renewal premiums, a part of which has made its way into the market,” said Mihir Vora, director and chief investment officer at Max Life Insurance.