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GIFT Nifty is the new identity for the offshore Nifty futures that were previously traded on the Singapore Exchange (SGX). It has now transitioned to India's International Financial Services Centre (IFSC) at GIFT City, Gujarat. It gives foreign investors access to Nifty futures in a regulated environment denominated in US Dollars.
This strategic move brings offshore trading volume back to India, improves regulatory oversight, and consolidates liquidity. By functioning for nearly 21 hours a day, GIFT Nifty allows investors to respond to global market signals effectively while trading on an Indian exchange.
Key Takeaways
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GIFT Nifty centralises offshore Nifty trading at the NSE International Exchange (NSE IX) in GIFT City, Gujarat
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Unlike the domestic Nifty (traded in INR), GIFT Nifty contracts are denominated in US Dollars (USD).
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It operates for approximately 21 hours, overlapping with trading hours in Asia, Europe, and the US.
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It is designed primarily for Foreign Portfolio Investors (FPIs), Non-Resident Indians (NRIs), and eligible domestic entities, rather than retail traders in India.
What is GIFT Nifty?
GIFT Nifty marks the historic transition of Nifty futures trading from Singapore (SGX Nifty) to India's IFSC. On July 3, 2023, the transition was completed to consolidate liquidity and bring offshore trading under Indian jurisdiction.
It operates as a regulated platform on the NSE International Exchange (NSE IX). This shift reduces the price gap that often existed between offshore and onshore markets. It strengthens India's position as a global financial hub, providing seamless continuity for international traders who previously used the Singapore platform.
Timings of GIFT Nifty vs Nifty
The trading hours of GIFT Nifty are its biggest advantage, designed to overlap with global financial markets. Unlike the domestic NSE market, which opens at 9:15 AM IST (pre-open from 9:00 AM) and closes at 3:30 PM IST, GIFT Nifty operates in two sessions covering nearly 21 hours:
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Morning Session: 06:30 AM to 03:40 PM IST (Overlaps with Asian and European markets).
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Evening Session: 04:35 PM to 02:45 AM IST (Overlaps with the US trading session).
Also, Know More About Share Market Timings
How will Investors Gain from GIFT Nifty?
Investors trading GIFT Nifty can benefit from Nifty's improved alignment with international markets, increased accessibility, and the possibility for higher liquidity. International Investors benefit from:
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Extended Access: The ability to trade Indian derivatives almost round-the-clock, reacting to events in the US or Europe instantly.
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Dollar Denomination: Reduces the currency risk for foreign investors since contracts are settled in USD.
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Single Pool of Liquidity: All orders are matched at GIFT City, creating a deeper, more efficient market, known as GIFT Connect. This market links Singapore Exchange (SGX) with the National Stock Exchange, enabling global Nifty derivative trading.
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Regulator: While SEBI regulates the domestic market, GIFT Nifty operates under the International Financial Services Centres Authority (IFSCA), which is the unified regulator for GIFT City.
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Settlement: Trades are settled through the NSE IFSC Clearing Corporation. Indian equity markets have largely moved to a T+1 settlement cycle, improving capital efficiency.
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Data Availability: Data is available on the NSE IX website, Bloomberg, Refinitiv, and major financial news platforms.
What's in Store for the SGX Nifty?
On June 30, 2023, all open contracts for the Singapore Exchange Nifty concluded trading, shifting their volume to the NSE International Financial Services Centre (IFSC) in Gujarat, India. This transition was part of an agreement between India's National Stock Exchange and the SGX to redirect the Nifty contracts.
Consequently, SGX Nifty was delisted, from the Singapore Exchange. This move aimed to centralise trading and channel the liquidity of Nifty contracts to the NSE IFSC, streamlining access and enhancing market efficiency for investors trading Indian equity derivatives.
Difference Between SGX Nifty and GIFT Nifty
Here are some distinctions between the SGX NIFTY and GIFT NIFTY index –
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Trading Locations: SGX Nifty refers to the Nifty index futures that are traded on the Singapore Exchange, while GIFT Nifty represents the Nifty index futures that are traded on the Gujarat International Finance Tech (GIFT) City exchange in India.
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Market Accessibility: With SGX Nifty, investors from across the world may trade the Nifty index around the clock, even when Indian markets are closed. Conversely, GIFT Nifty functions during Indian trading hours, offering local investors a means of engaging in direct trading of Nifty index futures.
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Regulatory Environments: The Singapore Exchange Regulation (SGX RegCo) provides oversight and rules for the operation of SGX Nifty. In contrast, GIFT Nifty adheres to Indian laws and regulations and functions under the regulatory framework established by the Securities and Exchange Board of India (SEBI).
Where Will GIFT Nifty Data Be Available?
Investors seeking reliable and updated information on this index have several platforms and sources to access relevant data. Financial news platforms such as Bloomberg, CNBC, and MoneyControl provide comprehensive coverage, offering real-time updates, market analysis, and expert insights.
Additionally, stock exchange websites such as NSE IX website hosts official GIFT Nifty data stream, providing investors with historical data, trading volumes, and comprehensive details on index futures. Market analysis tools such as Investing.com also offer charts, technical analysis indicators, and customisable watchlists to assist investors in making informed decisions.
Shifting to GIFT Nifty from SGX Nifty
In the Indian financial markets, the switch from SGX Nifty to GIFT Nifty is a calculated move influenced by several vital variables.
First, by combining Nifty index trading in the domestic market, the change seeks to improve strategic market positioning. By moving trade activity to this index, India hopes to boost its status as a global financial hub and advance its financial ecosystem.
Regulative issues are also crucial in this transformation. By moving trade to the Nifty futures market, the Indian government can better oversee and regulate it. Ensuring a more open and controlled trading environment preserves the market's integrity and inspires trust in investors.
In addition, the shift showcases India's objectives for the development of the financial sector. This index's designated international finance hub seeks to draw in foreign investors and advance the growth of financial services. The SGX Nifty's move to this index supports this goal and makes it easier for India's financial services and infrastructure to expand.
How Will the GIFT Nifty Be Traded?
The Nifty index trading platform provides a range of trading techniques and procedures. Potential traders may access it through approved platforms that offer a user-friendly interface and real-time market data.
These platforms give traders flexibility and control over their trading tactics by enabling them to place various order types.
After an order is carried out, the settlement procedure starts. It uses a central counterparty (CCP) system to support the T+2 settlement cycle, which settles trades within two business days after the trade date.
Traders must have a trading account with a recognised broker or financial institution that grants access to interact with the platform. They should acquaint themselves with the trading protocols, order types, and settlement procedures for efficient navigation.
Conclusion
With GIFT Nifty, investors have a special chance to gain access to the Indian equities market via a global financial hub. With its superior infrastructure, various sectors, and tax perks, GIFT Nifty has the potential to draw in global investment and boost the Indian economy.
