What is SGX Nifty and how it impacts Indian Stock Market?


Introduction

Every nation or country has its own platforms where they trade stocks. Each platform varies. Just like that the SGX is the Singapore Stock Market.


You must have heard many expert investors say that “SGX Nifty is bearish, or bullish.” So that means they are talking about the Singapore stock market (SGX) and due to the global effect of share trading, the Singapore stock market and Indian stock market are indirectly related. Thus we can analyze the SGX Nifty and somewhat predict the expected movements in the Indian Stock market already before the market opens.


So in this article, we will discuss about the Singapore stock market and being a foreign market how does it affect our Indian Market


What is ‘SGX Nifty' ?

The word SGX is an abbreviation for the Singapore Stock Exchange (SGX). SGX Nifty is a Nifty contract which is being traded on Singapore stock exchange. SGX Nifty is a derivative product (futures contract) of NSE’s Nifty index officially in Singapore stock exchange. In simpler terms, SGX Nifty is the Indian Nifty trading on Singapore Stock exchange. SGX Nifty does not show a remarkable difference in the price movements than Nifty. Many analysts use SGX Nifty to predict whether the Indian stock market will open higher or lower on a trading day.


Differentiating Between Indian Nifty and SGX Nifty

SGX Nifty is a Nifty contract trade which is a platform in the Singapore Stock Exchange and India, whereas the Indian Nifty contract trades on the NSE platform only.

The contract size of the SGX Nifty also differs than that of Nifty. Nifty is traded in lots of 75 shares, whereas SGX Nifty is denominated in terms of US dollars.


SGX is the most active trading contract in Singapore (as this is the only platform where trading occurs for more than sixteen hours a day). This high traffic on this platform results in high volumes of customers and trading activities, and since this same activity does not occur on the national exchange platform, SGX is much more profitable and more in need for many markets. But there is one thing that does not change, both Nifty and SGX Nifty are highly liquid and high volume of trades are executed.


Who can Trade in SGX Nifty?

Indian residents are not allowed to trade in SGX Nifty contracts or any other derivatives in other countries. Whereas NRIs can trade in SGX Nifty. For the investors who are not able to trade in the Indian Nifty and for those who want an exposure before entering the Indian nifty, SGX Nifty is a good alternative.


SGX Trading Hours

Indian Nifty begins at 9:15 am and operates till 3:30 pm, which means it trades for only six hours a day. According to the Indian time, Nifty futures on SGX is traded from 6:30 am to 11:00 pm, which means it trades for 16 hours a day.


Since SGX nifty trades for a longer period, it becomes a learning and practising market for beginners and other newcomers. However It is important to understand that not all stocks that Nifty comprises of are traded on SGX Nifty.


How SGX Nifty Affects the Indian Market?

As India and Singapore fall in the same continent, they have a lesser time gap and face nearly same global effect of share trading. And considering the current global scenario, the continuous inflow of information about COVID-19 has a direct impact on the financial markets.


Since SGX Nifty is mainly Nifty futures trading on the Singapore stock exchange, so it is common among investors to consider its effects on the Indian markets. The movement of the SGX Nifty is a very good starting point for the Indian stock exchange. This is possible primarily due to the trading hours. We know that there is a time difference between Indian Nifty and the SGX Nifty, in which the market opens 2 hours 30 minutes before the Indian market. While the Nifty trades for six and a half hours on the NSE (9:15 a.m. – 3:30 p.m.), the SGX Nifty trades for 16 hours a day, from 6:30 a.m. to 11:30 p.m. IST. Due to its long hours of trading, Professional traders and Investors find it extremely useful for their hedging requirements. The direction of the SGX Nifty is a guiding light for the Indian Investors. It can be inferred that if the SGX Nifty is 30 points positive then the Indian markets may open on a higher note. Same is true for the reverse case as well. Depending on SGX Nifty, intraday traders and smart traders can either take up long positions or short positions. This is an excellent head start to the day.


However, all the movements that we predict is not certain because of the economic factors that are present in both the countries. Every market has been affected due to the pandemic. Due to the massive downfall of economic growth and within the Indian economy, Nifty has started to provide premiums and discounts on opening prices for traders to make it much easier to invest and trade.

Conclusion

In a shell, it is important to understand that not all predictions are certain. Both the platforms are of equal importance as they help us understand the behavior of each other whenever the markets open. Beginners or experts, analyzing these two platforms can be quite beneficial for them.

If you have heard the phrase ‘ Money never sleeps’ from the popular movie ‘Wolf of W all Street’ SGX Nifty by offering 16 long trading hours is a live example that justifies it. Learning SGX Nifty not only introduces to one of the biggest International trade platform but also helps you monitor and predict the financial and economic impact on our Indian market beforehand.


Don’t work for money, but make it work for you!


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