What is GIFT Nifty?

What is GIFT Nifty?

GIFT Nifty, formerly known as SGX Nifty, is a derivative contract based on the Nifty 50 index that is traded on the NSE International Exchange (NSE IX) in GIFT City, Gujarat, India.

Here's a breakdown of what that means:

• Derivative Contract: A derivative contract's value is derived from an underlying asset, in this case, the Nifty 50 index. This means that GIFT Nifty doesn't represent direct ownership of the Nifty 50 stocks, but rather a contract that reflects their expected future value.

• Nifty 50 Index: This is a benchmark index representing the top 50 publicly traded companies in India, listed on the National Stock Exchange (NSE).

• NSE International Exchange (NSE IX): This is a subsidiary of the NSE located in GIFT City, a special economic zone (SEZ) designed to promote international financial services.

Key Points about GIFT Nifty:

• Trading Hours: GIFT Nifty offers extended trading hours compared to the regular Indian stock market, operating in two sessions: 6:30 AM to 3:40 PM IST and 4:35 PM to 2:45 AM IST (next day). This allows international investors to participate in the Indian equity market during their respective time zones.

• Dollar Denominated: GIFT Nifty contracts are settled in US dollars, making it convenient for international investors who may not have access to Indian Rupees.

• Regulatory Oversight: GIFT Nifty operates under the regulatory framework of the International Financial Services Centres Authority (IFSCA), ensuring adherence to global standards for transparency and investor protection.

• Tax Benefits: GIFT City, being an SEZ, offers tax incentives and exemptions for foreign investors trading in GIFT Nifty.

• Indicator of Indian Market Sentiment: Due to its extended trading hours and global investor participation, GIFT Nifty serves as an early indicator of how the Indian stock market (Nifty 50) might open and perform on any given day.

In summary, GIFT Nifty provides a platform for international investors to participate in the Indian stock market through a regulated, tax-efficient, and globally accessible derivative contract linked to the Nifty 50 index.

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