Despite muted returns last year, domestic insurance companies and the National Pension System (NPS) invested over Rs 1 lakh crore in Indian equities in 2025 to date, the highest combined annual inflow from these segments, data showed on Tuesday. 

Insurance firms invested Rs 56,821 crore in equities year to date (YTD), while NPS contributions reached Rs 51,308 crore, up from Rs 23,062 crore and Rs 13,328 crore in 2024.

Analysts said that an increase in regulatory flexibility, a surge in assets under management, and the pursuit of higher returns amid moderate debt yields fuelled the surge.

Over recent years, the Pension Fund Regulatory and Development Authority (PFRDA) has updated its rules to permit up to 75 per cent equity exposure for Tier-I NPS accounts and 100 per cent for Tier-II accounts.

Meanwhile, IRDAI relaxations permitted insurers to maintain equity allocations within prudential exposure limits, while maintaining a large share in government and approved securities.

Other domestic institutional investors such as mutual funds pumped in Rs 4.44 lakh crore in equities in 2025, up from Rs 4.15 lakh crore the previous year. Meanwhile, banks and some domestic financial institutions offloaded Rs 16,941 crore and Rs 158 crore, respectively.

Domestic institutional investors’ (DII) net purchases lend support to Indian markets this year amid huge shorting by FIIs. The success of the FII strategy of sustained selling in India and moving money to cheaper markets is expected to continue in the near term.

India Inc’s second-quarter FY26 earnings showed a stronger-than-anticipated performance with a 14 per cent year-on-year earnings rise by companies in key sectors, especially mid-caps.

Nifty is currently trading above 20 times FY27 estimated earnings, which is slightly above the last 10-year average PE ratio.