Today we will have a look at the details about SGX Nifty and how it impacts the Indian Stock Market.
If you have been an active participant in the Indian Stock Market, then you might have heard the term “SGX Nifty”. It is an unavoidable term even in the newspapers as well as news channels. But, before we go into more details, we need to understand a fact that every country has a platform of its own for the exchange of stocks and the functioning of this platform depends on the situations in the specific country.
What is SGX Nifty?
SGX is an abbreviation of Singapore Exchange and Nifty is a sample of the 50 largest companies of the index market that is introduced by the National Stock Exchange (NSE), i.e. the platform for the Indian Stock Exchange. Nifty is the benchmark index of the Indian Stock Exchange. So, we can conclude that SGX Nifty is nothing but the Indian Nifty that trades in the Singapore Stock Exchange.
Nifty trades for six and a half hours in the National Stock Exchange, India whereas Nifty Futures trades in Singapore Stock Exchange (SGX) for a minimum of 16 hours. So, for the traders and investors who are not able to access the Indian Stock Market for trading in Nifty, they opt to trade in SGX Nifty to get exposure to the Indian Stock Exchange.
Difference Between SGX Nifty & Nifty
- Nifty trades only on the National Stock Exchange, India. On the other hand, SGX Nifty is a Nifty Futures trade that is a stock exchange platform in the Singapore Stock Exchange as well as the Indian Stock Exchange.
- The contract size of Nifty and SGX Nifty is different. There are 75 shares in the Nifty shares lot in India whereas, in SGX Nifty, there is no contract with the shares in it. It means that for trade exchange in India, the traders or investors need to have a requirement of at least 75 shares, and on the other hand SGX Nifty has no such requirement.
- SGX Nifty is denominated in terms of US Dollars($) whereas it is not so for Nifty in India.
- SGX Nifty is more profitable than Indian Nifty as it is the most active stock exchange contract in Singapore. Here, trading occurs for more than 16 hours a day which leads to a huge number of customers for trading as compared to the Indian Nifty.
Eligibility for Trading in SGX Nifty
SGX Nifty is a great platform for investors and traders who want exposure before they enter the Indian Nifty. But, Indian citizens are not eligible to trade the contracts of SGX Nifty and other derivatives in other countries.
Impact of SGX Nifty on Indian Stock Exchange
One thing we are aware of is that there exists a time difference between Nifty and SGX Nifty. In SGX Nifty, the market starts two and a half hours earlier than Nifty in India. So, the investors and traders get an idea of the opening of the market by keeping a close watch on SGX Nifty. The fluctuations in SGX Nifty also determine to some extent that whether Nifty in India would open on negative points or positive points. But all the information can’t always be correct as the economic, as well as global factors, also persist between the two nations.
Also, in present times during the pandemic, there has been a great impact on the financial markets, especially in India. The traders are only left with SGX Nifty due to the shutting down of Indian Nifty. Due to the downfall of the Indian economy, Nifty has been providing huge discounts on the opening prices in the current times. So, it has become much easier for traders and investors nowadays to invest in shares.
SGX Nifty is an amazing alternative for the traders who wish to trade in Nifty but are not able to do so for some reason. Also, both SGX Nifty and Indian Nifty are of equal importance as they are somehow dependent and linked to each other in one way or another. It is very beneficial for traders and investors to know more about these platforms if they wish to excel in the field. We hope this article might have helped you to understand the details. To know more about the stock market, read more of the articles on our page.