What is SGX Nifty?
SGX Nifty is a derivative of the Nifty index, which is traded in the Singapore Stock Exchange.
So in simpler term SGX NIFTY is a futures contract that is traded on the Singapore Stock Exchange
As Indians trade NIFTY 50 futures in the Indian stock exchange, foreign investors can trade SGX NIFTY on the Singapore stock exchange.
How is SGX Nifty different from Indian Nifty?
The main difference between the SGX Nifty and the Indian Nifty is that the SGX Nifty is a futures contract which is traded in Singapore, whereas the Indian Nifty trades only on the Indian stock exchange which is the National Stock Exchange or NSE.
Another important difference is the contract size of the Indian Nifty and the SGX nifty. In Indian Nifty contract the lot size is 50, which is not required in the SGX Nifty.
SGX Nifty sees a high volume and trading because it is the most active trading platform in Singapore and the only trading platform that works for sixteen hours a day outside India.
This is definitely not the case with the Indian Nifty, which is a National exchange platform. These characteristics of SGX nifty make it more profitable.
How does SGX Nifty impact the Indian Market?
There is a time difference between the Indian Nifty and the SGX Nifty, wherein the Singapore market opens about two and a half hours before the Indian market.
SGX Nifty is the only trading platform that works for sixteen hours a day.
This makes SGX 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 SGX 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 SGX Nifty
Encourages more foreign investors to invest in the Indian derivative market.
The proximity in location between India and Singapore ensures that there is better connectivity between the two exchanges and lesser time lapse.
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 SGX Nifty provides leverage in transactions, especially with regard to the hedge funds.
The 16 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 SGX Nifty
SGX Nifty is more volatile than NSE Nifty, affected by world economic cycles and global political events.
Indian residents are prohibited from trading in SGX Nifty contracts.
Difference Between SGX 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 SGX Nifty, on the other hand, operates from 6:30 AM to 11:30 PM IST, trading for 16 hours a day in the Singapore Stock exchange.
The longer trading hours on the SGX ensures that the impact of global events is more advanced on the stocks traded in that exchange.
Additionally, the SGX Nifty futures is referred to by the traders for early decision making as juxtaposed to NSE Nifty.
Who are allowed to trade in SGX Nifty?
There are two types of investors or traders who trade SGX 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 SGX NIFTY, especially during the hours when our Indian markets are closed.
Can an Indian trade SGX Nifty?
If you’re an Indian resident, you cannot trade the SGX 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 SGX NIFTY and will depend on the laws of the country that you are living in.
What is the market timing for SGX Nifty?
In contrast to the Indian markets that are open for just about six hours i.e. 9:00 IST to 15:30 IST, the SGX Nifty is practically open 16+ hours a day.