What is GIFT Nifty? Meaning, Benefits, Process: Full Guide

When you come across Gift Nifty, you’re looking at a critical tool that signals market movements and offers a glimpse into India’s trading potential. Knowing what is Gift Nifty and its meaning helps traders and investors make informed decisions.

We have covered everything here, including the Gift Nifty meaning, its transformation from SGX Nifty, trading hours, contract details, and how it influences the Indian market.

Let’s go through the details and understand why Gift Nifty has become a key indicator for market participants around the globe.

Gift Nifty Full Form

Gift Nifty stands for “Gujarat International Finance Tec-City Nifty.” It represents the Nifty 50 futures and options contracts traded at the GIFT City International Financial Services Centre (IFSC) in India.

What is Gift Nifty?

Gift Nifty is a derivative contract based on India’s Nifty 50 Index, but it’s traded at the GIFT City IFSC exchange in Gujarat. Think of it as a way for global and domestic traders to buy or sell the future price of India’s top 50 companies’ stock index without directly trading in the Indian stock market.

Before 2023, this was known as SGX Nifty, traded in Singapore. Now, it’s relocated to India’s GIFT City exchange, bringing more transparency and better access for global investors.

Gift Nifty acts as a price indicator for the Indian market, especially in the early morning hours when the Indian markets are closed. It helps traders predict market movements and hedge their positions.

Why and How SGX Nifty Changed to Gift Nifty?

The transition from SGX Nifty to Gift Nifty was driven by regulatory, operational, and market integration reasons. Previously, SGX Nifty was traded on the Singapore Exchange (SGX) and provided international investors with a way to trade on Indian equity movements without direct exposure to Indian exchanges.

However, this trading was outside Indian regulatory oversight.

To bring these derivative trades back within India’s regulatory framework and promote GIFT City as a global financial hub, India’s National Stock Exchange (NSE) and SGX signed a collaboration agreement in 2022.

As part of this agreement, the SGX Nifty contracts were officially shifted to the NSE IFSC at GIFT City. This shift was completed in July 2023, and these contracts were rebranded as Gift Nifty.

The transition means Gift Nifty is now traded from within India, offering better regulation, improved data transparency, and easier access for international investors, while also strengthening India’s presence in global financial markets.

History of GIFT Nifty

Before 2023:

SGX Nifty, a popular derivative contract linked to India’s Nifty 50 Index, was traded on the Singapore Exchange (SGX). It gave global investors a way to trade Indian index futures outside Indian regulatory jurisdiction.

2018-2022:

NSE and SGX engaged in discussions about sharing data and co-listing products to resolve licensing and revenue concerns.

2022:

NSE and SGX reached a landmark agreement to move SGX Nifty to India’s GIFT City International Financial Services Centre (IFSC). The move aimed to strengthen India’s financial ecosystem and ensure regulatory control within the country.

July 2023:

The official migration of SGX Nifty to GIFT City IFSC was completed. It was rebranded as Gift Nifty and started trading on NSE IFSC.

Present Day:

Gift Nifty is now fully operational at GIFT City, offering global investors and traders a regulated, Indian-based derivative contract for Nifty 50 exposure.

How Does Gift Nifty Work?

Underlying Index:

It’s based on the Nifty 50, which represents India’s top 50 large-cap companies.

Trading Mechanism:

Traders can buy or sell Gift Nifty contracts to speculate on or hedge against future price movements of the Nifty 50.

If you think the Nifty 50 will rise, you can “go long” (buy Gift Nifty). If you think it will fall, you can “go short” (sell Gift Nifty).

Settlement:

The contracts are settled in cash (no physical delivery of shares). Settlement happens at the end of each contract cycle (usually monthly).

Global Access:

Gift Nifty is designed for global investors and can be traded during extended hours, even when the Indian markets are closed.

Check Live GIFT Nifty.

Gift Nifty Trading Time (IST)

• The opening time of Gift Nifty is 6:30 AM everyday.
• The closing time of Gift Nifty is 3:40 PM for first session, and 2:45 AM for the second session.

Gift Nifty Lot Size and Contract Specifications

How to Trade Gift Nifty?

Below is how to trade in Gift Nifty:

1. Open a Trading Account

Find a broker that is registered with the NSE IFSC Exchange at GIFT City. Complete the account opening process, including KYC documentation.

2. Fund Your Account

Deposit money into your trading account to ensure you meet margin requirements for trading Gift Nifty contracts.

3. Access the Trading Platform

Use the broker’s trading platform (online or app-based) to place your trades. Familiarize yourself with the platform’s features and tools.

4. Place an Order

Choose whether to buy (long position) or sell (short position) Gift Nifty futures or options. Set the order type: market order (instant execution) or limit order (specified price).

5. Monitor and Manage Positions

Keep an eye on your open positions and market movements. Adjust your positions if needed to manage risks or lock in profits.

6. Settlement

All trades in Gift Nifty are cash-settled at the end of the contract cycle (no physical delivery of stocks).

Relevant Pages You’d Like to Check:

• NSE Option Chain
• Nifty Option Chain
• BSE Option Chain
• Sensex Option Chain
• LTP Calculator

Gift Nifty vs Nifty 50

Why is Gift Nifty Important for Global Investors?

Extended Trading Hours

Gift Nifty operates for over 21 hours a day, including pre- and post-Indian market hours. This allows global investors to adjust their positions even when Indian markets are closed.

Access to India’s Economic Growth

India’s economy is one of the fastest-growing globally, and Gift Nifty provides a direct way for international investors to gain exposure to India’s top 50 large-cap companies.

Regulated and Transparent

Gift Nifty is traded at NSE IFSC, an Indian-regulated exchange, offering a safe and reliable framework for global participation.

Risk Management and Hedging

Global investors with India-focused portfolios can use Gift Nifty to hedge against market volatility or economic changes.

Early Market Indicators

Gift Nifty trades during global market hours, offering early signals and cues about the likely movement of India’s Nifty 50 before Indian markets open.

Gift Nifty Regulatory Framework

• Gift Nifty is traded at the NSE IFSC Exchange located in GIFT City, Gujarat.
• It is regulated by the International Financial Services Centres Authority (IFSCA).
• IFSCA ensures that Gift Nifty trading follows globally accepted standards, promoting transparency, investor protection, and market integrity.
• The framework aligns with India’s push to make GIFT City a global financial hub, enabling seamless trading for domestic and foreign investors.

Gift Nifty Taxation

• For domestic traders, Gift Nifty profits are typically treated as business income and taxed accordingly under Indian tax laws.
• For foreign investors, tax exemptions and incentives under the GIFT City framework may apply, making it a tax-efficient structure.
• Double Taxation Avoidance Agreements (DTAAs) between India and other countries may further reduce the tax burden on foreign investors.

Impact of Gift Nifty on Indian Markets

• Early Market Sentiment: Gift Nifty operates during hours when Indian stock markets are closed, providing an early indication of how the Nifty 50 Index might open and trade for the day.
• Global Participation: It brings in global investors and funds who may not directly participate in Indian markets, indirectly boosting market activity and liquidity.
• Increased Transparency: With Gift Nifty data available in real-time, domestic traders get more cues on global sentiment and market movements before Indian markets open.
• Risk Management for Domestic Traders: Indian institutional investors and funds can use Gift Nifty to hedge or adjust positions based on global market trends overnight.
• Economic Confidence: The presence of Gift Nifty at GIFT City strengthens India’s image as a reliable, globally competitive market hub, enhancing investor confidence in Indian markets.

FAQs About Gift Nifty

Why was Gift Nifty created?

It was created to bring back the SGX Nifty contracts to India, promoting domestic regulatory control and boosting GIFT City’s global financial standing.

Where can I trade Gift Nifty?

You can trade Gift Nifty on the NSE IFSC Exchange at GIFT City, Gujarat.

What is the lot size of Gift Nifty?

The standard lot size is 50 units of the Nifty 50 Index.

What are the trading hours of Gift Nifty?

Trading happens in two sessions: 6:30 AM to 3:40 PM IST and 4:35 PM to 2:45 AM IST (next day).

Is Gift Nifty cash-settled or physically settled?

Gift Nifty contracts are cash-settled, meaning no physical delivery of shares takes place.

What margin is required to trade Gift Nifty?

Margin requirements vary by broker and market volatility, but it’s usually a percentage of the contract value.

What is the expiry cycle of Gift Nifty contracts?

Gift Nifty futures and options expire on the last Thursday of every month.

Does Gift Nifty impact Indian market opening?

Yes, it acts as a sentiment indicator for Indian markets before they open.

Are there any tax benefits for trading Gift Nifty?

Yes, trading at GIFT City offers tax incentives for foreign investors and some exemptions under Indian law.

Is Gift Nifty trading risky?

Like any derivative trading, it carries risk due to leverage, market volatility, and global economic factors.

Can I use Gift Nifty for hedging?

Yes, traders and investors use it to hedge risks against the Nifty 50 Index’s movements.

Can Gift Nifty be used for arbitrage?

Yes, traders often use it for arbitrage between Gift Nifty and Indian Nifty 50 futures.