Introduction

Previously traded on the Singapore Exchange (SGX) and known as SGX Nifty, GIFT Nifty is a futures contract with the Nifty 50 Index as its underlying asset. It is traded on the NSE International Exchange, which is based at GIFT City in Gujarat.

GIFT Nifty is denominated in US dollars and is linked to both the Indian and Singaporean markets. Let’s find out if you should be investing in GIFT Nifty or not.

  5 Reasons GIFT Nifty should be on every investor's radar

1. Dollar-denominated contract

As discussed, the GIFT Nifty contract value is pegged to the US dollar, not the Indian rupee. This feature provides a hedge against currency risk and protects you from potential losses because of currency fluctuations. It also allows international investors to invest without worrying about exchange rate volatility.

2. Extended hours

GIFT Nifty offers a broader window for trading, operating in two distinct sessions - the first from 6:30 a.m. to 3:40 p.m. and the second from 4:35 p.m. to 2:45 a.m., as per Indian Standard Time (IST). These extended hours break geographical barriers and time constraints, allowing you to respond immediately to global market movements and economic events.

3. Early market indication

GIFT Nifty enables you to study the movement in GIFT Nifty futures contracts to expect the direction of the Indian market before it opens. It provides an early signal of a gap-up (when the opening price is higher than the previous close) or a gap-down (when the opening price is lower than the previous close) opening. This foresight gives you a sneak peek into the market’s potential behaviour.

4. Strong returns

As of August 23, 2024, the GIFT Nifty stood at 24,858.00, marking a 0.17% increase. The performance over different periods is as follows:

o   1 Week: 2.92%

o   1 Month: 1.86%

o   3 Months: 9.99%

o   6 Months: 12.63%

o   1 Year: 28.27%

Over the past three years, it has seen a return of 51.33%. This convincing performance can be referred to as the strength of the Indian economy and the performance of the companies on the Nifty 50.

5. Diversification

GIFT Nifty offers a way to diversify your holdings and lower risk. Exposure to the Indian market, which behaves differently from other international markets, can contribute to better overall performance of your portfolio.

Other points to know about GIFT Nifty

• Base migration: This initiative involved migrating the base operations from the Singapore Exchange to the NSE International Exchange (NSE IX) at Gandhinagar, Gujarat.

• Contract transfer: All derivative contracts valued at $7.5 billion, previously traded in Singapore, were relocated to India.

• GIFT City: GIFT City, situated in Gujarat, is a prospering financial hub targeted at rivalling global centres like Dubai, Mauritius, and Singapore.

• Feud resolution: This shift followed the resolution of a longstanding dispute involving the NSE.

• Four products: The GIFT Nifty umbrella brand encompasses four offerings - GIFT Nifty 50, GIFT Nifty Bank, GIFT Nifty Financial Services, and GIFT Nifty IT derivative contracts.

• Partnership: SGX and Nifty will share costs and revenues roughly 50-50.

• Centralisation of services: The renaming was part of a strategy to consolidate global financial services in GIFT City.

  Indicators for effective GIFT Nifty trading

• Moving averages: They are a frequently utilised indicator that helps you identify the market's trend direction.

• Oscillators: These offer a snapshot of real-time technical analysis for your chosen timeframe. They fluctuate between set extremes to create a trend indicator.

• Pivots: They represent key price levels where traders predict the market might either sustain its existing trend or shift to the opposite direction.

• Institutional zones: These zones are established using pivot points and Fibonacci levels. The green area signifies institutional support, while the red shows institutional resistance. The distance between these institutional zones is consistently 100 points.

• Volume: It is key in technical analysis as it provides insights into the power driving price fluctuations.

• Resistance and support levels: These are the price points where the Nifty index typically halts and changes direction. It is determined by examining chart patterns and market trends.

Conclusion

GIFT Nifty offers more than typical trading options. With its features like being tied to the US dollar, extended trading hours, early market forecasts, and strong regulatory standards, it is poised to be a preferred choice for investors. Its solid performance, lower transaction fees, and modern trading infrastructure make it a valuable option for both veteran and new investors.

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