SGX Nifty becomes GIFT Nifty starting today: What it means
For years, traders looked at the Singapore Stock Exchange Nifty, or SGX Nifty, for early cues on how Nifty opens on any given day. That changes starting today. The SGX Nifty has been rebranded as GIFT Nifty as it becomes a part of the NSE International Exchange (NSE IX) situated in GIFT City, Gandhinagar, the capital of Gujarat. Let's see what GIFT Nifty is.
Why does this story matter?
The rebranding of SGX Nifty as GIFT Nifty is a significant moment in global trading in India. The Indian government aims to make GIFT City an international financial center that can compete with the likes of Dubai and Singapore. GIFT Nifty is considered the beginning of that. It will encourage more foreign investors to invest in India's derivative market.
Derivative contracts worth $7.5bn shifted to GIFT City
GIFT Nifty is the new identity of SGX Nifty. As part of the rebranding, all derivative contracts, which were earlier traded in Singapore, have been shifted to GIFT City, which is short for Gujarat International Finance Tec-City. The contracts are worth $7.5 billion. From now on, US dollar-denominated Nifty futures contracts will trade in the NSE IX instead of Singapore.
GIFT Nifty will have two trading sessions
GIFT Nifty will have two trading sessions. The first session starts at 6:30 am IST and will continue till 3:40 pm IST. On the other hand, the second one will begin at 5:00 pm IST and end at 2:45 am IST. Due to the extended trading hours, it is going to set the prices in the morning for India.
GIFT Nifty to have a daily trading volume of $1.5-2bn
The daily trading volume of GIFT Nifty is expected to be $1.5 billion to $2 billion. Meanwhile, SGX Nifty had an average turnover of $3.9 billion. Nifty futures contracts were the second-highest contributors to SGX's equity derivatives in FY22, only behind SGX FTSE China A50 Index. They also played an important role in boosting the NSE's revenue.
Investors will be exempted from multiple taxes
Since NSE IX is located in a Special Economic Zone, GIFT Nifty investors will be exempted from securities transaction tax (STT), commodities transaction tax, dividend distribution tax, and capital gain tax. The incentives will make it an attractive option for non-resident investors. Apart from GIFT Nifty, NSE IX is also offering GIFT Nifty Bank, GIFT Nifty Financial Services, and GIFT Nifty IT futures.
