State-owned Life Insurance Corporation of India, the country's largest investor, bought just under 86 per cent of shares sold by the government earlier this week in state-run refiner and fuel retailer Indian Oil Corp, 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 Indian government sold 10 percent of Indian Oil, raising around $1.4 billion.
Officials at LIC, whose stake has risen to 11.11 per cent in Indian Oil from 2.52 per cent according to Tuesday's filing after market hours to the Bombay Stock Exchange, did not immediately respond to requests for comment.