GIFT NIFTY

GIFT NIFTY is a futures contract based on the NIFTY 50 index and traded on the NSE International Exchange (NSE IX), located in Gujarat International Finance Tec-City, Gandhinagar, Gujarat, India. Introduced in July 2023 as the successor to the SGX Nifty, GIFT Nifty serves as an international benchmark for the Indian equity market by enabling global investors to trade NIFTY 50 derivatives from an international financial services centre. The contract provides extended trading hours, facilitating price discovery for Indian equities outside the regular trading hours of the National Stock Exchange of India.

History

For many years, international investors traded NIFTY 50 futures through the SGX Nifty contract listed on the Singapore Exchange (SGX). To strengthen India's position as an international financial centre and encourage offshore trading within India, the National Stock Exchange of India (NSE) and the Singapore Exchange (SGX) entered into agreements to migrate the SGX Nifty business to GIFT City.

On 3 July 2023, trading officially transitioned from SGX Nifty to GIFT Nifty on the NSE International Exchange (NSE IX). Existing SGX Nifty positions were migrated to the new platform, making GIFT Nifty the primary offshore derivative linked to the NIFTY 50 index.

Objectives

The principal objectives of GIFT Nifty include:

facilitating international trading of Indian equity derivatives;
improving price discovery for Indian equities;
attracting foreign institutional investors;
strengthening GIFT City as an international financial centre;
increasing liquidity in offshore NIFTY derivatives;
supporting global access to Indian capital markets.

Underlying index

GIFT Nifty futures are based on the NIFTY 50, a free-float market capitalization-weighted index comprising 50 large-cap companies listed on the National Stock Exchange of India.

Movements in GIFT Nifty generally reflect market expectations regarding the opening direction of the Indian equity market.

Trading venue

GIFT Nifty is traded on the NSE International Exchange (NSE IX), which operates within the International Financial Services Centre (IFSC) at GIFT City.

The exchange is regulated by the International Financial Services Centres Authority (IFSCA).

Trading hours

GIFT Nifty offers extended trading hours covering multiple global market sessions.

Trading is conducted in two sessions:

an early trading session aligned with Asian markets;
a later session extending into European and early U.S. market hours.

The extended schedule enables international investors to respond to global economic developments outside the regular trading hours of Indian stock exchanges.

Contract characteristics

GIFT Nifty contracts generally feature:

the NIFTY 50 as the underlying index;
cash settlement;
trading in U.S. dollars;
standardized contract specifications;
multiple contract expiries.

Contract specifications are periodically updated by the exchange.

Participants

Market participants include:

foreign institutional investors;
foreign portfolio investors;
institutional traders;
proprietary trading firms;
hedge funds;
global asset managers;
market makers.

Indian and international participants use the contracts for hedging, speculation, and portfolio management.

Uses

GIFT Nifty is commonly used for:

hedging exposure to Indian equities;
price discovery;
portfolio risk management;
speculative trading;
arbitrage between domestic and offshore markets.

The contract provides investors with access to Indian equity market movements outside domestic trading hours.

Relationship with SGX Nifty

Characteristic	SGX Nifty	GIFT Nifty
Trading venue	Singapore Exchange (SGX)	NSE International Exchange (NSE IX)
Location	Singapore	GIFT City, India
Launch	2000	2023
Currency	U.S. dollar	U.S. dollar
Underlying index	NIFTY 50	NIFTY 50

GIFT Nifty replaced SGX Nifty as the principal offshore derivative linked to the NIFTY 50.

Importance

GIFT Nifty contributes to the internationalization of India's capital markets by:

extending trading access for global investors;
enhancing international price discovery;
increasing liquidity in offshore derivatives;
supporting GIFT City's development as a global financial centre;
strengthening India's position in international financial markets.

It also provides market participants with an indication of likely sentiment before the domestic equity market opens.

Impact

The introduction of GIFT Nifty marked a significant milestone in the development of India's international financial markets by relocating offshore NIFTY 50 derivatives trading from Singapore to GIFT City. The transition strengthened the role of the International Financial Services Centre as a global financial hub while improving India's control over offshore index derivatives. GIFT Nifty has become an important benchmark for international investors seeking exposure to the Indian equity market and plays a significant role in global price discovery for Indian equities.