Insurance companies increasing their Indian equity markets exposure

We have earlier written here about the fact that Insurance companies in India are increasing their exposure to the Indian stock markets. The first quarter of this fical 2008-09 data has come out and it goes on to prove that Insurance companies are the biggest buyers in the market.

As per the statistics disclosed by Business Line, Insurance companies in India has bought shares worth Rs15,000 crores in the first 3 months, April to June 2008. Life Insurance Corporation (LIC) has alone bought shares worth Rs12,000 crores. LIC's investment has increased by 60% in the Qtr 1, 2008-09 compared to Qtr 1 in 2007-08. The increase in the Insurance companies investment in stock markets is due to the increased inflow seen in the ULIP products sold by them. Though the volumes have come down due to market uncertainities over the last 3 months or so, ULIP's are still preferred medium to invest in Indian equities for the average Indian.

Ironically, during the same quarter, Mutual Funds have bought less than what they bought in Qtr 1 2007-08. MF's have bought shares worth Rs3,131 crores compared to Rs4319 crores the previous year.