If you have been closely following the news and developments in the Indian share market, you must have heard the word “GIFT Nifty” somewhere. However, you must be thinking what exactly is this word and what does it have in store for you as an investor or viewer. To dispel all the misconceptions, let us dive in and make this word easy and simple to follow.
What is GIFT Nifty?
GIFT Nifty is a future contract that is specifically linked to the performance of Nifty 50 index, a gauge of the largest 50 publicly traded firms listed on India’s National Stock Exchange (NSE). While the traditional Nifty 50 index functions under the traditional system of the Indian stock exchange, GIFT Nifty is specifically traded on the NSE International Exchange (NSE IX), strategically located in the GIFT City in Gandhinagar in the state of Gujarat.
Switching from SGX Nifty to GIFT Nifty
Earlier, global investors used to trade Nifty futures exclusively on the Singapore Exchange, commonly known as SGX Nifty. This process of trading gave such investors an opportunity to trade in the Indian market. There was an abrupt shift in July 2023 when these trading contracts were shifted officially to NSE IX, which just so happens to be in GIFT City. This shift gave rise to a new product of trading known as GIFT Nifty.
Trading Hours of Operation
One of the best and most useful aspects that GIFT Nifty provides to its members is certainly its extended business hours, which provide an excellent benefit by facilitating almost 21 hours of trading activity every single day:
- Morning Session: 6:30 AM to 3:40 PM IST
- Evening Session: 4:35 PM to 2:45 AM IST (next day)
This wide and expansive window offers a special chance for overseas investors to be able to respond quickly and efficiently to different market conditions happening in different time zones.
Benefits
– Global Accessibility
It provides foreign investors with a great platform that allows them to directly gain from the growth story of India. This is done without the constraints and restrictions of normal Indian market timings.
– Tax-Related Benefits
Trading has several tax advantages, such as exemption from Goods and Services Tax (GST), Securities Transaction Tax (STT), and capital gains tax.
– Denominated in USD
The contracts are written and held in US dollars, which is highly convenient for foreign investors as they can avoid the hassle of managing currency risks.
– Regulated Environment
It exists and functions under the ambit of the rules that have been drafted by the International Financial Services Centres Authority, more popularly referred to as IFSCA. This authority plays an important role in making sure that all goes on as per international norms and practices.
Indian Financial Markets Effects
GIFT Nifty is also very critical as a lead indicator, providing valuable indication of how the Indian equity market will act once the market is opened for trading. Volatilities and movements observed in during its designated trading session can provide valuable indications of the sentiment of global investors towards Indian stocks and their overall investment strategies.
Eligible Persons to Swap GIFT Nifty
GIFT Nifty is now available to:
- Foreign Portfolio Investors (FPIs)
- Non-Resident Indians (NRIs)
- Eligible Foreign Investors (EFIs)
Indian retail investors are not yet permitted to trade in Nifty-related business due to the existing foreign exchange regulations.
Final Thoughts and Conclusions
GIFT Nifty is a significant advancement in the effort to link and align India’s financial markets with the rest of the world economy. In enabling extended trading hours, providing lucrative tax relief, and providing a regulated platform, it provides a robust and stable platform for international investors who are interested in actively participating in Indian equities and being a part of this expanding market.