Water is also called as “नार” because it came out of नर ( highest god ).

Because this water (नार ) is the first abode of the highest god, so he called as नारायणः (नारा जलं अयनं स्थानं यस्य)

The reference is given in Manu Smriti : 

आपो नारा इति प्रोक्ता आपो वै नरसूनवः । 
ता यदस्यायनं पूर्वं तेन नारायणः स्मृतः ।

– मनुस्मृति 1.10


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