What is GIFT NIFTY?

GIFT NIFTY is a derivative contract, which will start trading on the NSE International Exchange (NSE IX) from July 3 2023, will be accessible for almost 21 hours – longer than the time the SGX Nifty contracts were available on the Singapore Exchange. The Nifty derivative contracts that were traded on the Singapore Exchange have been moved to NSE IX, and renamed Gift Nifty.

These contracts are accessible for almost 21 hours, which overlaps Asia, Europe, and US trading hours, the exchange said as it unveiled the new identity of SGX Nifty. Gift Nifty offers a single pool of liquidity and venue to access dollar-denominated Nifty derivatives at NSE IX under the regulatory framework of the International Financial Services Center Authority (IFSCA).

How does GIFT NIFTY impact the Indian Market?

There is a time difference between the Indian Nifty and the GIFT NIFTY, wherein the GIFT NIFTY opens about two and a half hours before the Indian market. GIFT NIFTY is the only trading platform that works for almost 21 hours. This makes GIFT NIFTY very helpful in predicting the Indian Nifty’s pre-market behaviour. This also allows investors to know the fluctuations in the market and how the Nifty trading will start in India. By checking GIFT NIFTY, the investors/traders get an idea about the Indian market and whether it will open with positive or negative results. Every morning it gives us a sense of how Indian markets would open.

Advantages of GIFT NIFTY

Encourages more foreign investors to invest in the Indian derivative market. It serves as a good alternative to investors who do not have access to Indian markets especially if they seek to transact in terms of US Dollars. The expanded working hours of GIFT NIFTY provides leverage in transactions, especially with regard to the hedge funds. The 21-hour time window also allows market participants to take a view on the Indian markets based on overnight developments in Wall Street enhancing their decision-making capacity.

Disadvantages of Trading in GIFT NIFTY

GIFT NIFTY is more volatile than NSE Nifty, affected by world economic cycles and global political events. Indian residents are prohibited from trading in GIFT NIFTY contracts. Difference Between GIFT NIFTY and NSE Nifty. The Indian stock market opens at 9:15 AM and closes at 3:30 PM, providing it a six-and-a-half-hour window to operate. The GIFT NIFTY, on the other hand, operates from 6:30 AM to 2:30 AM IST, trading for 21 hours a day in the NSE IX exchange. The longer trading hours on the Gift Nifty ensures that the impact of global events is more advanced on the stocks traded in that exchange. Additionally, the GIFT NIFTY futures is referred to by the traders for early decision making as juxtaposed to NSE Nifty.

Who are allowed to trade in GIFT NIFTY?

There are two types of investors or traders who trade GIFT NIFTY. The first are those traders who live outside India and because of Indian / International regulations, it is almost impossible for them to trade derivatives in India. The second are these foreign institutions that have investments in India.
Also the mutual funds of many countries have significant portfolios in India because India is a growing economy. To protect their portfolio against some unlikely events, they create hedging positions in GIFT NIFTY, especially during the hours when our Indian markets are closed.

Can an Indian trade GIFT NIFTY?

If you’re an Indian resident, you cannot trade the GIFT NIFTY. If you live in India, you cannot trade any derivatives outside India and that is the law.
However, if you are an NRI, there is a possibility that you can trade the GIFT NIFTY and will depend on the laws of the country that you are living in.

Disclaimer-

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