SGX NIFTY RENAMED AS GIFT NIFTY

To mark the transfer of a $7.5 billion derivative agreement from the Singapore Exchange to the NSE International Exchange (NSE IX) in Gujarat's Gandhinagar, SGX Nifty futures contracts have been rebranded as Gift Nifty as of Monday, July 3.

The futures contract for the NSE Nifty 50 Index of India, known as the SGX Nifty, will henceforth be referred to as the GIFT Nifty. The GIFT City in Gandhinagar, Gujarat will also receive any unfulfilled orders.

"This is going to set the prices in the morning for India. People were very apprehensive about what will happen when you place orders in Singapore. But it matches in GIFT City, Gandhinagar in India. It was all kind of a sci-fi activity in people's mind. Now it has happened, it is magic," said NSE MD and CEO Ashish Chauhan.

The Nifty derivatives contracts traded on the Singapore Exchange (SGX) were known as SGX Nifty. Under a unique agreement between SGX and the National Stock Exchange (NSE), trading in these contracts has now begun to take place on Gujarat International Finance Tec-City (GIFT City) as of today.

The turnover that was previously produced on the offshore market will now be produced onshore in Gujarat's Gift City with the launch of trading in the GIFT Nifty.

Understanding SGX Nifty 

SGX Nifty, short for Singapore Exchange Nifty, is a futures contract traded on the Singapore Exchange (SGX) that allows investors to speculate on the direction of the National Stock Exchange of India's (NSE) Nifty index. It provides an indication of where the Nifty index may open for trading before the Indian stock market begins its trading session, serving as a valuable tool for investors to anticipate market movements and manage their trading strategies.

Some important pointers:

1. Understanding Gift Nifty:

As of today, all open positions on the SGX have been transferred to NSE IX, giving the SGX Nifty a new name. NSE IX, which is located in GIFT City SEZ and operates under the regulatory umbrella of the International Financial Services Centre Authority (IFSCA), will now serve as the trading venue for US dollar-denominated contracts of Nifty futuresinstead of the Singapore Exchange. Trading in the SGX Nifty has been stopped and will be eventually removed from the Singapore Exchange.

2. Reason behind the transition

: The government looks at this transition as a facilitator for; transforming the ambitious GIFT City into a hub for Indian and global financial and IT businesses.Tapan Ray, MD & Group CEO, GIFT City, said, “ GIFT City is becoming a leading global financial hub and destination of choice for investors across the world, with comprehensive tax structures, ease of business, and world-class infrastructure.” “Gift Nifty will help India to become a net exporter of financial services and achieve the honorable prime minister’s vision to onshore the offshore,” he added.

3. Timings of GIFT Nifty:

The Gift Nifty will be available for over 21 hours, which coincides with trading hours in Asia, Europe, and the US. It will be available in two sessions: the first will start from IST 6:30 am and last till 3:40 pm, and the second session will be from IST 4:35 pm to 2:45 am.

4. How to check Gift Nifty figures:

Gift Nifty figures can easily be checked on the NSE IX at https://www.nseix.com/

5. SGX-NIFTY's 50-50 partnership:

As part of a liquidity transition, all open positions in SGX Nifty are transferred to NSE IFSC Nifty. According to the agreement, the expenses and profits would be distributed "roughly 50-50" between SGX and NIfty, according to Michael Syn, head of equities at SGX. The GIFT City will serve as the trading venue for futures and options, and SGX will handle clearing.

6. Four products of GIFT Nifty :

There will be a total of four products under the umbrella brand which are, GIFT Nifty 50, GIFT Nifty Bank, GIFT Nifty Financial Services, and GIFT Nifty IT derivative contracts.

7. Expected change and benefits:

Since it is only a transfer from one stock  exchange to another, there won't be much of a change for ordinary traders and investors, but there may be some general advantages that can be considered:

The NSE-SGX connection would broaden the appeal of Indian markets to international investors, particularly those who are not already actively involved in Indian capital markets.
 2. By taking this action, GIFT City would further solidify its position as a new financial hub that the government plans to build to compete with other major financial hubs like Dubai, Mauritius, and Singapore.

8. Can retail traders trade in Gift Nifty contracts?

No. For individuals using the Liberalised Remittance Scheme (LRS) method, leveraged transactions are not permitted.

The worldwide derivatives market has seen a considerable change as a result of the rebranding of SGX Nifty to Gift Nifty. It will now be interesting to examine how the change affects trade activity and investor views over time.

Implications for the Indian Economy and Stock Market 

The SGX Nifty used to trade for 16 hours. After the transformation, the Gift Nifty will be traded for 21 hours (almost) - in two sessions. The time for the first session would be from 6.30 am to 3.40 pm. The second session starts at 4.35 pm and will continue until 2.45 am (till next morning). 

The move is expected to boost the GIFT City which is also India's first international financial center. Also, this shift and the development of GIFT City lead the path for future market developments and initiatives to engage global markets with the Indian capital markets. Importantly, the longer trading hours spreading across different time zones will enhance accessibility for investors.

The change (move) will benefit the investors as NSE IX operates out of SEZ, making them eligible for exemptions from Securities Transaction Tax (STT), dividend distribution tax, commodity transaction tax, and capital gains waivers. Retail investors won't be impacted after the change.

SGX Nifty Gift Nifty FAQs

Will SGX Nifty be called GIFT Nifty? 

Yes, SGX Nifty, starting from 3rd July 2023, is called GIFT Nifty.

What is the relation between SGX Nifty with Nifty? 

The Nifty index is the benchmark stock index of the NSE. It comprises 50 of the largest and most actively traded stocks across various sectors of the Indian economy.

SGX Nifty is a futures contract based on the Nifty index that is traded on the Singapore Exchange (SGX). It allows investors outside of India, particularly in the Asia-Pacific region, to speculate on the future direction of the Nifty index without needing direct access to the Indian stock market.

Why did Nifty name change to GIFT Nifty? 

The name was changed to GIFT Nifty as part of a strategy to centralize international financial services in GIFT City.

Can we predict Nifty by SGX Nifty? 

Yes, SGX Nifty can provide insights into potential market sentiment and trends for the Nifty index. However, it is not a definitive predictor because of differing trading hours and market dynamics between the exchanges. However, significant movements in SGX Nifty before the NSE opens can influence investor sentiment and trading strategies for the Nifty index.

Does SGX Nifty affect the Indian market? 

Yes, SGX Nifty can affect the Indian market to some extent. Significant movements in SGX Nifty futures during non-trading hours in India can influence investor sentiment and trading strategies once the National Stock Exchange (NSE) opens. However, the impact may vary depending on factors such as the magnitude of the movement, overall market conditions, and other global economic factors.

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