Sublime Consulting

Yes! Recent data released by Life Insurance Council clearly indicates that the 16 Life Insurance companies in India are moving the Indian Equity market. Literally.
While the FIIs pumped in around $ 8 billion in Indian equities in FY 2006, the Life Insurance companies invested around $ 35 billion worth of equities in FY 06-07.
What is interesting in this finding is that the domestic equity mutual funds chipped in with just about $ 2 billion.
Bulk of the contribution[to the tune of 75%] in the life insurance segment was thanks to the behemoth, Life Insurance Corporation of India.The $ 26 billion investments by LIC indicates that no longer the FIIs flows could have significant impact in the domestic equities market.
Case in point - FII outflows in August 2007 was approximately to the tune of $ 2 billion. But sensex and nifty still ended the month positive with almost 3% returns.
Next to Hang Seng we have been better performers in the last two months in comparison with other emerging markets and developed markets.
The increasing participation by retail investors in equity market through Unit Linked Products or ULIPS floated by the Life Insurance Companies could have helped stemmed the tide in the domestic equity markets while FIIs were pulling out funds, specifically hedge funds due to redemption pressures.

This sure is a tipping point for our Indian Markets and reversal of roles as to who supersedes the equity market flows in the Country.
Of course, one needs to watch whether this is sustainable, because if and when our markets do get bearish[due to global factors and political factors] in the near term, our retail investors again could develop cold feet to equity investing.
The last time around we saw huge participation of domestic house holds investing in capital markets, was when Harshad Mehta moved the market in 1990s!
And the rest is history…

We hope this time around its different..
May we raise a toast to the coming of age of the Indian Investor!