The Rebirth of SGX Nifty as GIFT Nifty: A Complete Overview

GIFT City is India’s first international financial services center, situated between Ahmedabad and Gandhinagar. It is an under-construction business district and a fully-operational greenfield smart city. Designed with globally benchmarked regulations, taxation, and policies, GIFT City provides an ecosystem for crucial economic activities.

Gift Nifty, formerly known as SGX Nifty, is an index derivative contract based on the price of company stocks. These derivative contracts derive their value from an underlying asset. While trading company stocks directly is one option, trading these derivatives separately offers an alternative approach.

The Evolution: SGX Nifty to Gift Nifty

Previously known as SGX Nifty, the equity index was based on India’s National Stock Exchange’s (NSE) Nifty index. It served as the pioneering initiative to link the capital markets of India and Singapore. However, with the relocation from the Singapore Exchange (SGX) to NSE’s International Exchange (NSE IX) situated in Gift City, the index has been rebranded as Gift Nifty.

The SGX used to facilitate trading in Nifty futures and options denominated in US dollars under an agreement with the NSE.

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The Need for the Shift

Singapore, being a bustling offshore financial center, attracts overseas traders seeking low taxation rates, easy registration, and operational facilities.Traders utilized SGX Nifty to gain early indications of Nifty 50 before the Indian market opened, capitalizing on the time difference between Singapore and India. Over time, the volume of SGX Nifty futures grew to match that of trading within India. The Indian government aimed to retain control over capital and ensure these trades occurred within the country, thereby benefiting the nation.

To discourage offshore trading and promote a tax-free trading zone in Gujarat, efforts were made to integrate the nation into the global financial system. By relocating the exchange to Gandhinagar, the GIFT City ecosystem becomes integrated with international financial markets, enticing foreign investors with zero taxes, dollar contracts, and world-class infrastructure.

In conclusion, the transformation of the India-Singapore joint stock exchange to Gift Nifty in Gujarat marks a significant milestone in India’s journey to become a global financial center. This shift, along with the collaborative initiatives and exemptions offered, positions Gift City as an attractive destination for international investors and bolsters India’s presence in the global financial landscape.

GIFT Connect: Enhancing Indian Market and Expanding Global Reach

The relocation of the exchange to India inaugurates the full-scale operations of NSE IFSC-SGX Connect, a collaborative initiative between SGX and NSE aimed at trading stock index-based products and promoting global investments in India. The GIFT Connect brings together international and onshore GIFT participants, creating a larger liquidity pool for Nifty products. This development not only deepens the Indian market but also enhances its international reach and acceptance.

GIFT Connect: A Dual Collaboration

The GIFT Connect, inaugurated in July 2022, is a dual collaborative arrangement between SGX and NSE. Its purpose is to facilitate global investors’ seamless trading in Indian stock derivatives without regulatory hurdles. Previously, such trades were only possible through the Singapore exchange.

GIFT Connect unifies both international and domestic participants, resulting in a deeper pool of liquidity and an expanded range of Nifty products for investment.

The Benefits of Gift Nifty for Investors

The transition to Gift Nifty is India’s endeavor to attract India-centric trading and compete with global financial centers like Dubai, Mauritius, and Singapore. The primary objectives include raising funds for Indian products, onshoring markets, and setting prices of Indian products in dollar terms across all time zones. In essence, the goal is to internationalize India’s derivatives trade.

FAQs 

1. What is Gift Nifty?

 Gift Nifty, formerly known as SGX Nifty, is an equity index derivative contract based on India’s Nifty index. It serves as a cross-border initiative that connects the capital markets of India and Singapore. Gift Nifty is now exclusively traded from Gift City, India’s first International Financial Services Centre (IFSC) located in Gandhinagar, Gujarat.

2. Why was the shift to Gift Nifty necessary?

 The shift to Gift Nifty was necessary to consolidate trading within India and accrue benefits to the nation. The Nifty derivative contracts on SGX contributed significantly to its equity-derivative volumes. The Indian government aimed to discourage offshore trading and promote a tax-free trading zone in Gujarat. By integrating the nation into the global financial system, India can enhance its control over capital and attract more investments.

3. How does Gift Nifty benefit investors?

 The transition to Gift Nifty aims to attract India-centric trading and position India as a global financial center. It allows India to raise funds for Indian products, onshore markets, and set prices of Indian products in dollar terms across all time zones. Foreign investors trading in Gift Nifty also become eligible for exemptions from various taxes and waivers available in the GIFT Special Economic Zone, further enhancing their investment opportunities.

4. What are the trading hours for Gift Nifty? 

Gift Nifty operates for two trading sessions every day, stretching over 21 hours. The first session runs from 6:30 am to 3:40 pm as per the Indian Standard Time (IST). The second session is designed to attract European and American investors and runs from 4:35 pm to 2:45 am IST.

5.What are Gift Nifty derivatives?

Gift Nifty derivatives are the rebranded version of SGX Nifty derivatives that were traded in Singapore.

6.What is the difference between SGX Nifty and Gift Nifty?

SGX Nifty was traded in Singapore while Gift Nifty is traded on the NSE International exchange in Gift City, Gujarat.

7.Where is Gift Nifty traded?

Gift Nifty is traded on the International exchange in Gift City, Gujarat.

8.What is the trading symbol for Gift Nifty?

The trading symbol for Gift Nifty is GIFTNIFTY.

9.How is Gift Nifty calculated?

The calculation of Gift Nifty is based on the performance of the top 50 companies listed on the National Stock Exchange (NSE).

Disclaimer: The information provided in this article is for general informational and educational purposes only. It does not constitute financial advice or recommendation. Always consult your financial advisor before Investing or Trading.