GIFT Nifty is an index at its core, but it’s way more than just a trading index. It is a game-changing product in the Indian financial markets. GIFT Nifty is basically a replacement for the SGX Nifty, which was the Nifty 50 Index Futures traded on the Singapore Exchange. For those who don’t know what Nifty 50 is, it is the most significant Indian stock market index. It represents the weighted average of 50 of the largest and most liquid stocks listed on the National Stock Exchange (NSE) of India.
This strategic transition from SGX Nifty to GIFT Nifty also significantly empowers investors by combining global access with the huge market potential of India, thus offering better trading opportunities and increased liquidity.
What is GIFT Nifty?
Basically, GIFT Nifty stands for Gujarat International Finance Tec-City Nifty. It is an exclusive index and essentially a variant of the Nifty 50, traded on the NSE International Exchange, commonly known as the NSE IFSC and located in GIFT City, Gujarat. As a matter of fact, it will replace the old SGX Nifty, which was traded on the Singapore Exchange.
With understanding of what is GIFT Nifty, what is SGX Nifty, GIFT Nifty meaning, and SGX meaning, let’s understand why the timings of the two indices and their trading hours are important.
Transitioning to GIFT Nifty would ensure that this trade remained strictly within India's shores, along with better compliance requirements, easier market access, and smoother integration with the Indian financial system. This leads to the discussion of trading hours for both GIFT Nifty and SGX Nifty.
Timings of GIFT Nifty and SGX Nifty
GIFT Nifty operates for nearly 21 hours a day, starting at 4:00 AM IST and going all the way up to 2:00 AM IST the very next morning. This extended schedule allows investors to trade in US and European market hours-feasible timings for people across different geographies. In comparison, the earlier derivatives, the SGX Nifty, are usually open during the Singapore market hours, which have a very negligible overlap with Indian market hours.
The extended hours of GIFT Nifty cater to traders eager to respond to shifts in the global market and the latest economic news. This, in turn, fosters increased liquidity and greater trading volumes.
How will GIFT Nifty benefit investors?
1. Global Accessibility: GIFT Nifty can be traded during extended hours, allowing investors to virtually trade around the clock. This would be convenient and would even allow for a response to world events as they happen.
2. Greater Liquidity: With extended trading hours and increased participation, there would be better liquidity. This means the bid-ask spread will be low; hence, it will be easier to place large orders.
3. Cost Efficiency: A reduction in the cost of transactions, besides the tax benefits accruing to GIFT City's SEZ, can eventually make trading cheaper for both domestic and foreign investors.
4. Regulatory Advantages: GIFT Nifty is under the control of Indian authorities, therefore, it has been subjected to close adherence to Indian Market Rules, hence more clarity and safety.
Additional Read: NIFTY 50 vs NIFTY Alpha 50
What is the future of the SGX Nifty?
It is now called the GIFT Nifty, a name change due to the broader agreement between the NSE and the SGX in bringing the trade home. The existing contracts of SGX Nifty have been smoothly transitioned to GIFT Nifty, and nothing has changed in the life of traders. This may position India as a much stronger global financial hub and simultaneously open up avenues for international investors to come onto the GIFT City platform.
Difference Between SGX Nifty and GIFT Nifty
| SGX Nifty
| GIFT Nifty
|
Location
| Singapore Stock Exchange
| NSE International Exchange
|
Trading Hours
| Limited to Singapore Market Hours
| Almost 21-hour trading across global time zones
|
Regulatory Jurisdiction
| Singapore regulations
| Indian regulations
|
Liquidity
| Moderate liquidity
| Higher liquidity
|
Cost Efficiency
| Higher transaction costs, due to taxes
| Lower transactions costs, as GIFT is in a SEZ
|
Where Will GIFT Nifty Data be Available?
The data of GIFT Nifty would be available on the NSE International Exchange-NSE IFSC platforms similar to that of Indian markets: Live on the investor's own trading terminal, portal of financial news websites and market data providers; detailed historical and real-time analysis on the official website of NSE IFSC and through various financial service providers.
Why is SGX Nifty being shifted to GIFT Nifty?
The shift from the SGX Nifty to the GIFT Nifty forms part of India's bigger game plan to reinstate the trading of Indian derivatives within its borders. Allowing a setup in GIFT City, the Indian government envisions keeping market activities at home for better regulation and building an active international financial hub. The decision also ascertains that the proceeds of trading in Indian derivatives stay within the borders of the country and hence benefit the local economy, improving India's position within the world of finances.
How does GIFT Nifty work on a stock exchange?
The GIFT Nifty would be bought and sold on the NSE International Exchange through a trading account opened with the NSE IFSC. Investors can open a trading account with any of the brokers registered in GIFT City, and that would give them access to the GIFT Nifty contracts. The process is similar to ordering through trading terminals or online orders that one places for regular Nifty futures on local exchanges.
Additional Read: What is FinNifty in the Stock Market
Conclusion
GIFT Nifty opens up a new frontier for the Indian financial markets with unprecedented cross-border trading opportunities. In times when boundaries are shifting day by day in the case of finance, GIFT Nifty will surely be an important connector between India and global markets for the investor fraternity, offering unparalleled access and opportunities.
Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.
This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
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