Stock market investment has become one of the popular investment options these days. If you are new to the investment world, you must have come across several terms like Nifty, Sensex, Nasdaq, SGX Nifty and many more. To understand the working of the stock market and invest wisely, it is important to understand these terms in the market. In this article, learn about SGX Nifty, how it is different from Nifty, its impact on the Indian markets, and its benefits.
What Is Nifty?
Nifty stands for the National Stock Exchange Fifty. It is the flagship stock market index of the NSE in India. It represents the performance of the top 50 large-cap companies listed on the NSE across various sectors. The Nifty index serves as a benchmark for investors and provides a snapshot of the overall market sentiment and trends. It is widely followed by traders, investors, and financial institutions as a key indicator of the Indian stock market's performance and acts as a basis for derivative instruments like Nifty futures and options.
What Is SGX Nifty?
SGX Nifty, also known as the Singapore Nifty, is a futures contract based on the Nifty 50 index of the NSE of India. It is listed and traded on the Singapore Exchange (SGX). SGX Nifty allows investors outside of India to participate in Indian stock market even when the Indian markets are closed. It indicates the expected opening level of the Nifty 50 index, based on the trading activity in SGX Nifty futures. Traders and investors use SGX Nifty as a reference to gauge market sentiment and make informed trading decisions before the Indian stock market opens for trading.
However, starting 3rd July 2023, SGX Nifty is rebranded as GIFT Nifty and will be traded on NSE International Exchange (NSE IX). The USD 7.5 billion worth of derivative contracts which were traded in Singapore earlier, will shift to India. And SGX Nifty will be delisted from the Singapore Exchange.
Who Can Trade on SGX Nifty?
NRI Indians and foreign portfolio investors are allowed to trade in SGX Nifty. Any investor who cannot trade in Nifty can consider SGX Nifty. If you are an investor residing in India, you are not allowed to trade in SGX Nifty.
Difference Between Indian Nifty and SGX Nifty
Though SGX Nifty and Nifty may sound the same, there are several differences between these two indices.
| Factor | Indian Nifty | SGX Nifty |
| Traded on | NSE in India. | Singapore Exchange SGX. |
| Trading Hours | 9:15 AM to 3:30 PM Indian Standard Time (IST). | It works in two sessions - from 6:30 AM to 3:40 PM (IST) and then again from 4:35 PM to 2.45 AM (IST) in the second session. |
| Regulatory Oversight | Governed by the Securities and Exchange Board of India (SEBI) and Indian regulatory bodies. | Operates under the regulatory framework of the Singapore Exchange and relevant authorities in Singapore. |
| Accessibility | Accessible to domestic and international investors. | Accessible to investors outside of India. |
| Purpose | Serves as the benchmark index for the Indian stock market, representing the performance of the top 50 large-cap companies listed on the NSE across various sectors. | Allows investors to take positions or trade on the Nifty 50 index even when the Indian market is closed. |
| Trading Mechanism | Trades are executed on the NSE through an extensive network of brokers and trading terminals. | Trades are conducted on the SGX platform, accessible through brokerage firms that provide access to SGX. |
| Price Movements | Reflects real-time price movements based on trading activity in the Indian market. | Indicates the expected opening level of the Nifty 50 index before the Indian market opens. |
| Derivative Instruments | Serves as the underlying index for derivative products such as Nifty futures and options traded on the NSE. | SGX Nifty futures contract allows investors to take positions on the Nifty index and manage risk. |
| Market Impact | Driven by domestic factors and sentiments affecting the Indian economy and companies listed on the NSE. | Influenced by both domestic and international factors, including global market trends and sentiments. |
| Settlement Currency | Trades settled in Indian Rupees (INR). | Trades settled in US Dollars (USD). |
SGX Nifty’s Impact on Indian Stock Market
SGX Nifty has a notable impact on the Indian stock market. SGX Nifty acts as a pre-market indicator, offering an early indication of the expected opening level of the Nifty 50 index before the Indian market begins trading. As SGX Nifty is traded during Singapore market hours, it allows investors to assess market sentiment and make informed trading decisions even before the Indian stock market opens. The movement of SGX Nifty can set the initial tone for the Indian market and influence early trading patterns.
The movement of SGX Nifty assists intraday traders in determining whether to take short or long positions. Additionally, SGX Nifty exhibits higher volatility compared to NSE Nifty. However, relying solely on this parameter to predict the Indian stock market is not advisable; it is essential to consider other factors.
Benefits of SGX Nifty
- • Early Signal: Traders closely watching the trends on SGX Nifty are better informed about the trends in the Nifty 50 and the global market sentiments surrounding it. It helps them take better trading decisions.
- • Extended trading hours: SGX Nifty provides extended trading hours, allowing investors to trade the Nifty 50 index futures outside of regular Indian market hours. This flexibility enables investors to react to global market developments and adjust their positions accordingly.
- • Access for foreign investors: SGX Nifty provides a platform for foreign investors to gain exposure to the Indian stock market. It allows international investors, who may face restrictions or limitations in directly accessing the Indian market, to participate in the Nifty 50 index futures. This enhances market liquidity and promotes international investment in Indian equities.
Latest Developments in SGX Nifty and Nifty - July 2023
Effective from 3rd July 2023, SGX Nifty has rebranded as GIFT Nifty and all the derivative contracts worth USD 7.5 billion, earlier traded in Singapore, will shift to India. GIFT City is the new financial hub in Gujarat, India. The Indian government intends to develop it as a competitor to other global financial centres like Singapore, Dubai and Mauritius. And as for SGX Nifty, it got suspended for trading in SGX and will further get delisted from the exchange.
Conclusion
Nifty and SGX Nifty are two important indices in the market. However, before investing in the market, it is ideal to consider your investment objective and risk tolerance. Do thorough research and make informed decisions. And to kickstart your investment journey, open a demat account on Angel One for free.