NIFTY is a stock market index for the Indian Stock Exchange (NSE) platform. It represents 50 companies which are some of the largest companies in India and maintains its weighted average to help investors know about the performance of companies in the stock market. It is one of the two main stock exchange indices in India, the other being BSE Sensex.
SGX Nifty is a derivative of the Indian Nifty index (Nifty 50) traded on the Singapore Stock Exchange platform, where it sets a predetermined price for the trade share and minimizes the future risk of any investment.
To make it easier for you to understand, you should keep in mind that just like Indian Nifty trade on NSE, which is the Indian stock exchange platform, SGX Nifty is future trade Nifty in Singapore, where the share price is predetermined. The buyer and the seller have to commit to that pre-determined price regardless of any changes that may occur in the stock market in the future.
How is SGX Nifty different from Indian Nifty (NSE Nifty)?
The main difference between SGX Nifty and Indian Nifty is that SGX Nifty is a futures trade platform in Singapore where stock prices are predetermined to hedge future risk, whereas Indian Nifty trades only on Indian stock exchange platforms. Which is National Stock Exchange or NSE.
SGX Nifty sees a huge volume of clients and trading activity as it is the most active trading platform in Singapore and the only trading platform that operates sixteen hours a day. This is certainly not the case with the Indian Nifty, which is a national exchange platform. These features of SGX Nifty make it more profitable.
How does SGX Nifty impact the Indian market?
As we have already discussed, SGX Nifty proves to be helpful in predicting and observing the behaviour of Indian Nifty. There is also a time difference between the Indian Nifty and the SGX Nifty, with the Singapore market opening about two and a half hours before the Indian market. This allows investors to keep an eye on SGX Nifty to know the fluctuations in the market and see how the overall trading process is going.
Seeing this, investors get an idea about the Indian market whether it will open with positive or negative results or not. So, those who have doubts about investing in the Indian market can invest in SGX Nifty and keep an eye on SGX Nifty to get an idea about the Indian Nifty and stock exchange platforms beforehand.
Both Indian Nifty and SGX Nifty are equally important because they have some impact on each other’s behaviour, and you cannot talk about one without mentioning the other. Everyone who wants to enter the world of stock market and start trading like an expert must know and be familiar with the terms Nifty and SGX Nifty and many other financial terms commonly used in the stock market that plays an important role.
Advantages of SGX Nifty:
It encourages more foreign investors to invest in the Indian derivatives market. The proximity of location between India and Singapore ensures better connectivity and less time lag between the two exchanges. It serves as a good alternative for investors who do not have access to the Indian markets, especially if they want to transact in US dollar terms. The extended working hours of SGX Nifty provide advantages in transactions, especially with respect to hedge funds. The 16-hour time window allows market participants to take a look at the Indian markets based on overnight developments in Wall Street enhancing their decision making.
Disadvantages of trading in SGX Nifty:
SGX Nifty is more volatile than NSE Nifty, influenced by world economic cycles and global political events. Indian residents are prohibited from trading in SGX Nifty contracts, however, Indian investors can still indirectly access the SGX Nifty through derivative products offered by foreign institutional investors (FIIs) or through participatory notes (P-notes).
Difference between SGX Nifty and NSE Nifty timings:
The Indian stock market opens at 9:15 am and closes at 3:30 pm, giving it six and a half hours to operate. SGX Nifty, on the other hand, SGX Nifty operates on the Singapore Stock Exchange from 6:30 AM to 11:30 PM IST, trading 16 hours a day.
The longer trading hours on SGX ensure that the impact of global events is more advanced on stocks traded on that exchange. Additionally, SGX Nifty futures are referred to by traders as a comparison with NSE Nifty for quick decision making.
