Gift Nifty: What It Is, Features & Key Insights

The Government of India conceptualised GIFT City (Gujarat International Finance Tec-City) to create a globally competitive financial and IT services hub. GIFT City sought to provide a favourable environment for businesses across the globe to operate out of. The intention was to boost financial services, create jobs, and facilitate offshore business in India. GIFT City is regulated by the International Financial Services Centres Authority (IFSCA). 

To support this innovative initiative and to advance India’s position as a global financial services hub, the National Stock Exchange (NSE) made a strategic move by establishing its fully owned subsidiary, the NSE International Exchange (NSE IX), on November 29, 2016. 

NSE IX launched trading in 2017 to capitalise on the opportunities in the GIFT city framework and to bring back trading activities (previously traded on international exchanges like SGX) to Indian jurisdiction by leveraging GIFT city’s regulatory structure and special economic zone benefits.

What is GIFT Nifty?

GIFT Nifty tracks the performance of India’s NIFTY 50 index. It was introduced on July 3, 2023, replacing the earlier SGX Nifty, and GIFT NIFTY derivatives are traded on the NSE International Exchange (NSE IX) located in GIFT City, Gandhinagar, Gujarat. 

Because of growing international interest in the Indian stocks markets, Nifty derivatives first started trading internationally on the Singapore exchange in September 2000 in the name of SGX Nifty and were later moved to GIFT City exchange July 2023 under the GIFT Connect agreement between SGX and NSE IX. GIFT Nifty derivatives are denominated in US dollars and based on the respective NIFTY indices. It enables Foreign Institutional Investors (FIIs) and non-resident individuals to trade in NIFTY outside of India. 

NSE IX in GIFT City offers the following futures and options contracts based on Indian indices: 

• GIFT NIFTY 50

• GIFT Nifty Bank

• GIFT Nifty IT

• GIFT Nifty Financial Services

​Features of GIFT Nifty

The following are the important features of GIFT Nifty:

Extended trading hours 

GIFT Nifty's trading hours, which span approximately 21 hours Mon-Fri, provide significantly broader access for international investors than the standard Indian exchange trading hours (which are 9:15 AM to 3:30 PM IST).

USD denomination

SGX Nifty was a Singapore Dollar denominated, which required currency conversion for trading. GIFT Nifty is USD denominated making it easier for foreign institutional investors (FIIs) to trade in.

Tax benefits of GIFT Nifty

Being located in GIFT City SEZ, it offers different exemptions in capital gains tax, Commodities Transaction Tax (CTT),  Goods and Services Tax (GST), and Securities Transaction Tax (STT) on trading activities. 

Better compliance and regulatory environment

Operating within India’s jurisdiction, GIFT NIFTY aligns closely with the Indian financial system. It ensures better compliance, avoiding complexities and lowering costs associated with cross-border payments.

​The transition from SGX Nifty to GIFT Nifty​

The shift from the SGX Nifty in Singapore to GIFT Nifty in GIFT City was done through GIFT Connect, which is a bilateral agreement between SGX and NSE IX.    represents a significant development in India’s financial markets. Here’s a detailed overview of the transition:

What was SGX Nifty?

SGX Nifty was a futures contract based on the NIFTY 50 index, traded on the Singapore Exchange (SGX) denominated in Singapore Dollars (SGD). It allowed foreign investors to gain exposure to the Indian stock market without directly trading on Indian exchanges.

Reason for transition

Here are the main reasons for the transition of GIFT Nifty from SGX Nifty:

Bring back trade to India: SGX Nifty trading was outside India’s jurisdiction, benefiting Singapore. The shift was initiated to centralise international trading activities within India’s financial ecosystem.

Leverage GIFT city benefits: GIFT Nifty is traded on the NSE International Exchange (NSE IX) based in GIFT City (IFSC) designed under the SEZ Act. Hence, tax incentives, liberalised regulations, and other benefits can be leveraged.

Boost the country’s financial system: The transition aligns with India’s goal to establish GIFT City as a global financial centre, bringing more global financial services and participants into India.

Differences Between GIFT Nifty and SGX Nifty

Though both GIFT City Nifty and SGX Nifty are futures and contracts 

based on the NIFTY 50 index, there are some key differences between the two:

​Conclusion

Transition to GIFT NIFTY from SGX NIFTY eases access to global investors who want to be a part of India’s growth story. GIFT NIFTY’s extended trading hours, regulatory framework, and tax benefits make it an attractive value proposition for the global investor.