Thursday, March 20, 2008

The National Investment Fund

Day before yesterday, SEBI has amended the DIP Guidelines to include the National Investment Fund in the definition of ‘Qualified Institutional Buyers’ (QIBs).
The National Investment Fund was set up from the proceeds of disinvestment of public sector undertakings. It is intended to be used primarily for funding health and education projects. See this article in
The Hindu for more details.
By amending the definition of QIBs to include the National Investment Fund, SEBI has allowed the National Investment Fund to invest in the portion reserved for QIBs in all Public Offers. This implies that more public funds would be ploughed into the stock market. Given the high volatility in the stock markets, its not clear whether this would be beneficial.

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