For investors who track the Indian stock market, one of the most widely followed indicators before the market opens is the SGX Nifty. It serves as a crucial tool for predicting how the Indian equity markets might perform during the trading day. SGX Nifty, short for Singapore Exchange Nifty, was an offshore derivative based on the Nifty 50 index traded on the Singapore Exchange. For years, it allowed international investors to take exposure to Indian equities without directly trading on Indian exchanges.
What is SGX Nifty?
The SGX Nifty was essentially a futures contract linked to the Nifty 50 index, which represents the top 50 companies listed on the National Stock Exchange (NSE) of India. It allowed foreign investors, especially institutional ones, to trade Indian market movements in a globally accessible and regulated environment. Since the contract was traded in Singapore, it operated in different time zones, often opening earlier than the Indian markets. This made SGX Nifty an important early indicator of how the Indian stock market might behave once trading began in India.
For instance, if the SGX Nifty was trading higher in the morning, it generally signaled a positive opening for the Indian markets. Conversely, a downward trend in SGX Nifty futures often indicated a weak or negative start for domestic indices.
Transition from SGX Nifty to Gift Nifty
In 2023, a major change took place in the way Indian market-linked derivatives were traded internationally. The trading of SGX Nifty contracts was officially moved from the Singapore Exchange to the Gujarat International Finance Tec-City (GIFT City) in India. The new platform was renamed Gift Nifty. This move was part of a collaboration between the Singapore Exchange (SGX) and the National Stock Exchange (NSE) of India to bring offshore trading activity back to Indian jurisdiction.
Gift Nifty now operates on NSE International Exchange (NSE IX) located at GIFT City in Gujarat. It offers futures contracts on both the Nifty 50 and Nifty Bank indices, catering to global investors who want to trade Indian equity derivatives. While the SGX Nifty was earlier settled in Singapore, the Gift Nifty now provides a more seamless, India-based trading environment with extended market hours that overlap with global trading sessions.
Why SGX Nifty (Now Gift Nifty) Matters
The SGX Nifty has long been a key sentiment indicator for market participants. Even after transitioning to Gift Nifty, it continues to serve the same purpose. Analysts, traders, and investors monitor Gift Nifty movements to gauge early trends in the Indian market. Because it reflects global investors’ outlook on India’s economy, it helps domestic traders plan their strategies before the official market opening.
Conclusion
The SGX Nifty played a vital role in connecting global investors to Indian equities and offering insights into market sentiment before trading hours. With its transition to Gift Nifty, this global linkage has become even stronger, providing more transparency and efficiency under India’s regulatory framework. Whether called SGX Nifty or Gift Nifty, this index remains an indispensable barometer of the Indian stock market’s direction, helping traders anticipate trends and make informed decisions in an increasingly interconnected world.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
