Life Insurance Corporation (LIC), the country's largest investor, bought just under 86% of shares sold by the government earlier this week in state-run Indian Oil Corporation, a regulatory filing showed.
New Delhi is seeking to raise as much as $11 billion by selling stakes in state-run firms this year. While LIC is a frequent back up for government sales, the sum it bought on Monday, amid a stock market rout, is likely to raise questions over the future of the sell-off programme.
The government sold 10% of Indian Oil, raising around $1.4 billion.
Officials at LIC, whose stake has risen to 11.11% in Indian Oil from 2.52% according to Tuesday's filing after market hours to the Bombay Stock Exchange (BSE), did not immediately respond to requests for comment.