China's Huatai Insurance, the country's fourth-largest property underwriter, became the first insurer to invest in domestic stocks when it built some positions last Thursday, state media said on Tuesday.
Rival China Life Insurance, the country's largest insurer, is also poised to enter the market after having obtained trading seats on the Shanghai and Shenzhen bourses.
The benchmark index has gained 10 percent since February 1, when it closed at its lowest level in nearly six years following a market slump in 2004.
"There are signs that the market may reverse its bearishness in the near term, helped by a slew of market-friendly policies, such as allowing insurers to trade stocks," said analyst Hu Weitao at Eagle Securities.
China's stop steel maker Baoshan Iron and Steel Co Ltd, better known as Baosteel, was one of Tuesday's most active stocks, jumping 2.2 percent to end at 6.5 yuan.
China United Telecommunications Corp, the smaller of the country's two wireless operators, was the most actively traded and closed up 1.2 percent at 3.28 yuan.
Analysts said investors sought bargains among blue chips as such stocks had suffered heavy losses in a market slump last year due to worries their bottom lines might be hurt by Beijing's economic-cooling measures.
The benchmark index dived 15 percent in 2004 to become Asia's worst performer that year, hit by the economic-cooling steps, corporate scandals and expectations of a flood of new shares.
Beijing has been trying to lift markets. In the latest move, China planned to create a $6 billion investment fund by June to support the markets, using public funds for the first time to intervene in times of volatility, state media and analysts said on Monday.