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 can you trade in it?
Let’s explore everything you need to know about this intriguing index.
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 stands for Gujarat International Finance Tec-City Nifty. It is a benchmark index that represents the performance of the top 50 companies listed on the National Stock Exchange of India (NSE).
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. The index began trading under its new name on July 3, 2021, and operates in two trading sessions to align with international market timings.
Understanding GIFT Nifty Index
Back in 2000, India’s NSE introduced Nifty 50, an index comprising 50 major Indian companies. They also launched derivatives, like futures contracts, based on this index.
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, so 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.
Gift Nifty offers extended trading hours, making it available for over 21 hours a day, targeting investors from different time zones.
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 can be attributed 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.
The Indian government aimed to retain control over capital and ensure that trading benefits accrued domestically. Thus, they could promote a tax-free trading environment in Gujarat. The aim was to integrate the nation into the global financial system.
- Gift Nifty facilitates trading directly in India, reducing dependence on foreign exchanges like SGX.
- Gift Nifty boosts liquidity and activity in the Indian market.
- Gift Nifty 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 Gift Nifty, 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.
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.
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.