In the fast-paced world of finance, keeping up with market trends is essential. One such trend that has been making waves recently is the emergence of GIFT Nifty. What is GIFT Nifty?
Did that make you think about some gift in the stock market? Nah!
It’s the first cross-border effort linking the capital markets of India and Singapore.
How to trade in Gift Nifty?
Let’s explore everything you need to know about this intriguing index, including Gift Nifty full form, Gift Nifty timings, etc.
What is GIFT Nifty?
GIFT Nifty Full Form- GIFT Nifty stands for Gujarat International Finance Tec-City Nifty.
The name derives from Gujarat’s ambitious project, the Gujarat International Finance Tec-City. It aims to establish a global financial hub in India.
GIFT Nifty is a benchmark index that illustrates the performance of the top 50 companies listed on the NSE- National Stock Exchange of India.
It was rebranded from SGX Nifty and shifted to the new international exchange NSE IFSC in GIFT City, Gandhinagar, Gujarat.
The index began trading under its new name on July 3, 2021. It operates in two trading sessions to align with international market timings.
Understanding GIFT Nifty Index
In 2000, India’s NSE introduced the Nifty 50, an index comprising 50 major Indian companies. Based on this index, derivatives, like futures contracts, were also launched.
Now comes the SGX Nifty.
It is a similar derivative contract but traded on the Singapore Stock Exchange. It allows foreign investors to trade on Indian market movements in dollars.
The need for SGX Nifty arose because India wanted to make it easier for foreign investors to participate in its markets.
However, at that time, India’s reputation wasn’t fully established. Thus it partnered with Singapore, a credible financial hub.
This arrangement allowed foreign investors to access the Indian market indirectly, bypassing dealing with the Indian rupee.
However, most benefits were for Singapore rather than India.
To rectify this, with all the planning, Gift Nifty was introduced.
It aims to bring back the trading volume associated with SGX Nifty to India.
Gift Nifty is part of GIFT City, an exclusive financial centre offering incentives to foreign businesses.
This move consolidates regulatory oversight and enhances GIFT City’s appeal as a financial hub.
As of June 30, SGX Nifty ceased to exist, and Gift Nifty started trading on July 3 on the GIFT/NSE IFSC.
It offers extended trading hours, over 21 hours a day, targeting investors from different time zones.
What are the Benefits of Gift Nifty
This index offers many benefits for investors:
- It aligns closely with the domestic Indian market, making it easier for local investors to participate.
- This index provides longer trading hours compared to the NSE, allowing for more flexible trading times.
- It concentrates trades within GIFT City, creating a more liquid market for Nifty derivatives.
How to Trade in Gift Nifty
Trading in GIFT Nifty is similar to trading in any other index. Investors can buy and sell Gift Nifty futures and options contracts through authorised brokers.
GIFT Nifty Timings
GIFT Nifty operates for nearly 21 hours and is available for trading in two sessions.
GIFT Nifty Opening and Closing Time
The trading hours for GIFT Nifty are from 6:30 AM to 3:40 PM and then from 4:35 PM to 2:45 AM, Indian Standard Time.
Why SGX Nifty Changed to GIFT Nifty
The shift from SGX Nifty to GIFT Nifty happened due to regulatory changes and market dynamics.
- The significant contribution of Nifty derivative contracts to SGX’s equity-derivative volumes.
- Singapore’s status as a busy offshore financial centre, offering low taxation rates and simplified registration processes, attracted overseas traders.
- Traders used SGX Nifty to anticipate Nifty 50 performance before the Indian market opened.
- Over time, the volume of SGX Nifty futures increased, matching the trading volume of similar instruments within India.
Indian government aimed to maintain control over capital and ensure that trading benefits stayed within the country. Thus, they could promote a tax-free trading environment in Gujarat.
The aim was to integrate the nation into the global financial system.
- It facilitates trading directly in India, reducing dependence on foreign exchanges like SGX.
- This index boosts liquidity and activity in the Indian market.
- It aligns with the promotion of Gujarat International Finance Tec-City (GIFT City).
- Trading Gift Nifty may come with reduced costs compared to SGX Nifty, as traders avoid fees and charges from both exchanges.
- With this index, India moves closer to opening its market on a global scale.
Gift Nifty encourages foreign investors to migrate their trading activities to India. They can benefit from tax incentives and operational benefits available at GIFT/NSE IFSC.
What is the Difference Between SGX Nifty And GIFT Nifty
SGX Nifty and Gift Nifty both link to the Nifty 50 index but serve different roles in separate markets:
- SGX Nifty: This is a futures contract based on the Nifty 50 index, traded on the Singapore Exchange. It comes under the regulation of Singapore Exchange Regulation (SGX RegCo).
It lets international investors gain exposure to the Indian market without trading directly on India’s NSE.
- Gift Nifty: Traded on the NSE International Exchange in GIFT City, Gujarat, this is a dollar-denominated index derivative. It offers a cost-effective way to trade the Nifty 50 index.
This financial index comes under the regulation of SEBI.
The shift from SGX Nifty to Gift Nifty moved the trading volume and liquidity from Singapore to India, now regulated by the IFSCA.
Conclusion
In essence, Gift Nifty represents India’s strategic move towards global market integration and financial self-reliance. Thus offering opportunities for both domestic and foreign investors in the Indian market.
FAQs| What is GIFT Nifty Index
The GIFT Nifty is a financial index that tracks the performance of the Nifty 50 index and is traded on the NSE International Exchange in GIFT City, Gujarat.
GIFT Nifty is a financial index that serves as an indicator of the Indian stock market. It was rebranded from SGX Nifty and shifted to the new international exchange NSE IFSC in GIFT City, Gandhinagar, Gujarat.
Nifty is the benchmark index of the National Stock Exchange of India, reflecting the performance of 50 major Indian companies. Gift NIfty is a futures contract derivative of the NIFTY, traded in the international financial zone of GIFT City, Gujarat, in US dollars.
Source :- indiatoday.in, economictimes.indiatimes.com
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Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.