Gift Nifty includes four products which are Gift Nifty50, Gift Nifty Bank, Gift Nifty Financial Services and Gift Nifty IT derivative contracts. So what exactly is Gift Nifty let us understand them in detail.
Before understanding Gift Nifty let us first understand what is Nifty all about:
What is NIFTY?
- Nifty is a small sample of 50 companies of the index market, belonging to different economic sectors that are introduced by National Stock Exchange or NSE, which is an Indian Stock Exchange Platform. The full form of Nifty is National Stock Exchange for FIFTY. Every country has its own platforms for stock exchange and Nifty is India’s platform for stock exchange that helps investors understand company’s performance daily before making any big investment.
But there is another term that most people get confused with and that is SGX Nifty
What is SGX NIFTY?
- SGX Nifty is a derivative of the Nifty Index and it is traded in Singapore stock exchange platform. Indian Nifty trades on NSE which is Indian Stock Exchange platform and SGX Nifty is the futures trade Nifty in Singapore where the price of the share is preset and the buyer and seller have to commit to the pre decided price despite of any changes that takes place in the stock market in the future.
There are two points of differences between NIFTY and SGX NIFTY
- SGX Nifty is a futures trade platform in Singapore where the prices of a stock are predetermined to avoid future risk whereas Indian Nifty trades only on the Indian Stock Exchange platform which is National Stock Exchange or NSE. The second difference is the contract size of the Indian Nifty and the SGX Nifty.
- In an Indian Nifty a contract between the buyer and the seller must have a minimum of 75 shares. This is not required in case of SGX Nifty.
How does SGX NIFTY impacts Indian Market?
- SGX Nifty helps in predicting and observing the Indian Nifty’s behavior. Singapore market opens two and a half hours before the Indian market. This allows the investors to get an idea about the Indian market and whether it will open with positive or negative results. Those investors who are skeptical about the Indian market can invest in SGX and keep an eye on the SGX Nifty. But this does not guarantee an accurate result and are subject to various economic factors of both the countries. Both these countries India and Singapore have different economic structures and different market behavior.
SGX NIFTY is now GIFT NIFTY
- SGX Nifty futures contract have been renamed as Gift Nifty with effect from 3rd July 2023. It is a shift of $ 7.5 billion derivative trade from the Singapore Exchange to the NSE International Exchange (NSE IX) in Gujarat’s Gandhinagar.
- Gift Nifty is a new identity given to SGX nifty as all the open positions in SGX have been shifted to NSE IX. Instead of Singapore Exchange US –dollar denominated contracts of Nifty futures will now trade in NSE IX which is Gift City SEZ. It will work under the regulatory framework of the International Financial Services Centre Authority (IFSCA).
- SGX Nifty has been suspended for trade ng and will eventually get delisted from the Singapore Exchange. Gift Nifty will now be accessible for almost 21 hours and it overlaps with Asia, Europe and US Trading hours. It is open in two sessions from 6.30 am to 3.40 pm and then again from 4.35 pm to 2.45 am in the second session.
What is Gift City?
- Gujarat International Finance Tec-City (GIFT City) is a central business district under construction in Gandhinagar district in Gujarat, India. It is India’s first operational greenfield smart city and international financial service Centre, which the Government of Gujarat promoted as a greenfield project.
Impact of the Shift
- According to experts the shift will add momentum to GIFT City becoming a true international. Currently the NRI account opening process involves attestation of documents from the embassy and tax deduction at source is involved after every sale transaction.
- This shift will help GIFT City to emerge as a leading international financial service centre and will significantly increase trading volumes and liquidity. This would attract more investors, traders and market intermediaries. With increased focus from government GIFT has successfully attracted the international community’s attention within a short period with a banking asset book of $ 35 billion-plus.
- The Government has ambitious plans for further growing the finance and technology at GIFT City The aim is to achieve the objectives through the financial incentives , ease of doing business and growing the infrastructure. It is also putting all its efforts to attract corporate/MNCs to set up their regional/global corporate treasury centres.
- Government has even created a new financial authority that would take role of SEBI, RBI, IRDAI, PFRDA named International Financial Service Centre Authority (IFSC Authority) which would be one stop for all policy making in GIFT city. Being an IFSC many of the Foreign Exchange Management Act regulations that apply to onshore corporates are not applicable at GIFT City. This would help in creating a conducive environment to set up a cross border or regional treasury.
- The SGX Nifty shift to India’s GIFT City would deepen India’s integration with the global financial sector and further strengthen India’s growing recognition in the International arena.
- SGX Nifty shift will benefit the investors as the NSE IX operates out of an SEZ, making them eligible to get exemptions from Securities Transaction Tax, commodity transaction tax, dividend distribution tax and capital gains waiver.
