GIFT Nifty Explained: What It Is and How to Invest in It?

Investing in the Nifty 50 has been relatively possible for Indian retailers since 1996. However, for traders worldwide, the same was happening through SGX Nifty (via the Singapore Exchange). It was based on India’s National Stock Exchange’s (NSE) Nifty index.

Fast forward to 2022, the volume touched $3.9 billion of daily average turnover. With the rising volume in SGX Nifty, the need to bring the population back to the home country gave rise to the GIFT Nifty Index.

But what does GIFT Nifty mean? Well, keep reading to have a broad understanding of the GIFT Nifty index and how it benefits investors!

What Is GIFT Nifty Index?

GIFT Nifty, earlier known as SGX Nifty, is an index-based derivative contract tied to the Indian Nifty 50 index. It means this index’s value (or performance) depends on how the Nifty 50 index performs in the market. It acts as a medium for investors to track the performance of the Indian stocks listed on the NSE (National Stock Exchange).

It was launched on July 3, 2023, after the closure of SGX Nifty on June 30, 2023. It paved the way for the proceeding transactions to occur in GIFT City. Eventually, they shifted their volume to the NSE International Financial Services Centre (IFSC) in Gujarat, India under the name of GIFT Nifty.

GIFT Nifty Explained

GIFT Nifty full form stands for “Gujarat International Finance Tec-City Nifty,” which is a dollar-based derivative contract mimicking the top 50 Indian stocks. It provides an opportunity for the FPIs and other foreign investors to access the benefits offered by GIFT Nifty. However, this facility is not only available for Indian retailers under the RBI’s Liberalised Remittance Scheme (LRS).

Earlier, the SGX Nifty acted as an early indication for traders on the Nifty 50 before the market opened. It gave a time advantage between the Singapore and Indian markets. However, this action resulted in the surging of the SGX Nifty futures, which also later equated to the volume of trades happening in India. Thus, to maintain control over capital flows, the government took the initiative to bring the SGX derivative index to the home country. But, how did GIFT Nifty come to GIFT City? Was it a disadvantage for the SGX Nifty?

Well, the city has a cross-boundary investment arrangement that integrates the Hong Kong Stock Exchange and the Shanghai Stock Exchange. Earlier, this was possible through SGX. As a result, this unified GIFT Nifty gave a competitive edge for GIFT City to compete with other Asian markets.

With the GIFT Nifty, the Indian government aims to attract foreign investments and provide a platform for international investors to trade in Indian stocks. It is regulated by the International Financial Services Centres Authority (IFSCA) and the Monetary Authority of Singapore (MAS).

NSE and Singapore share a relationship of more than 22 years. Now, considering the SGX Nifty concerns, both (NSE and SGX) agreed on a contract that is valid for five years initially and can extend to two more years. At this point, the SGX will earn an initial revenue (of 75 per cent) from GIFT Nifty. Once the limit is achieved, the sharing then reduces to a 50:50 model.

Timings Of GIFT Nifty And SGX Nifty

The GIFT Nifty index operates in two sessions for 21 hours:

• First phase - 6.30 am to 3.40 pm
• Second phase - 4.35 pm to 2.45 am (as per IST)

While these timings are suitable for Indian retail investors, they also allow foreign investors to invest in the market. Previously, SGX operated between 6:30 AM to 11:30 PM.

Likewise, the International Financial Services Center Authority (IFSCA) regulates the Gifty Nifty index. However, it operates under the NSE International Exchange (NSE IX).

Types Of GIFT Nifty Contracts

Apart from the Nifty 50, there are different types of contracts available for investors. It includes:

• GIFT Nifty 50 - It includes the top 50 listed Indian stocks on the NSE.
• GIFT Nifty Bank - This derivative contract tracks the 12 largest banks in India.
• GIFT Nifty Financial Services - It comprises of 25 largest financial services companies in India.
• GIFT Nifty IT - It consists of the 25 largest IT companies in India.

Where Can You Access Data?

If you want to track or access the GIFT Nifty data, you can visit the NSE and BSE platforms to have separate sections for daily updates on these derivatives contracts. Alternatively, you can also check out the broker’s GIFT Nifty trading platform or news sources.

How To Invest In GIFT Nifty?

Investing in these dollar-dominated derivatives comes with these steps:

1. Open an Account with an NSE IFSC-registered broker.
2. Meet the eligibility criteria.
3. Complete the KYC requirements.
4. Fund your account and start investing in any of these contracts.

How Will GIFT Nifty Benefit Investors?

Planning to invest in the GIFT Nifty index? Well, there are certain benefits available for such investors. It includes:

Extended hours:

Since this index surpasses the timings of the SGX, it provides a long window for the participants to invest and leverage the derivatives. You get an extended timeline of 21 hours!

Liquidity pool:

One integrated marketplace brings in more sellers and buyers. As a result, the liquidity increases and leads to minimal transaction costs.

Robust regulatory framework:

With compliances imposed by IFSCA, investors have a strong level of trust and confidence in the GIFT City ecosystem. It also brings transparency for the foreign players residing in international markets.

Exposure to Indian stocks:

As this index follows the Nifty 50, investors have access to the top-performing stocks, further diversifying their investments.

Tax Exemptions:

GIFT City provides various incentives like a minimum alternate tax (MAT) of 9 per cent to foreign investors. Alongside, the government also slashed stamp duty and full exemption on income for 10 consecutive years (out of 15 years).

Transaction Costs:

This index is free from any STT, CTT (Commodities Transaction Tax), or exchange turnover taxes, thus lowering the cost of transactions in comparison to the domestic market.

No Currency Risk:

As these derivative contracts are dollar-denominated, the risk of currency rate fluctuations disappears.

Difference Between SGX Nifty, GIFT Nifty, and Nifty 50

	GIFT Nifty	SGX Nifty	Nifty 50
Meaning	A dollar-based derivative contract based on Nifty 50.	Singapore’s Nifty-based derivatives product (discontinued now).	Benchmark index of top 50 NSE-listed Indian companies.
Location	NSE International Exchange (NSE IX), GIFT City, Gujarat, India.	Singapore Exchange (SGX).	NSE, India.
Trading hours	Two sessions: 6:30 AM–3:40 PM and 4:35 PM–2:45 AM (next day) IST.	6:30 AM – 11:30 PM.	Usual market hours: 9:15 AM – 3:30 PM IST.
Access	Available for foreign investors.	International investors.	Indian retail and institutional investors.
Regulations	IFSCA and MAS (Singapore).	Singapore Exchange Regulation.	SEBI (Securities Board of India).

Conclusion

With the entry of GIFT Nifty, the investment opportunities for FPIs and FIIs have broadened. This geographical shift has given global access to many foreign players in one unified marketplace. With extended trading hours, increased transparency, and access to Indian markets, this index has opened new doors for both institutional and retail investors. As investors’ focus shifts to the GIFT Nifty index, Indian stocks and derivative market products get more exposure in the international market.