In the morning news, you may hear very often about the ‘SGX Nifty’. It opens before the Indian stock market. For those who do not know that you can also trade in derivatives in the SGX Nifty besides the National Stock Exchange (NSE). Now, as an investor, a question may crop up in your mind what is SGX Nifty and its impact on the Indian stock market?
What is SGX Nifty?
There are essentially two prominent aspects of SGX Nifty, which are:
- SGX: It is a short form of Singapore Exchange.
- Nifty: It is a benchmark index of the National Stock Exchange (NSE) that incorporates 50 top stocks from 12 different sectors of an economy.
When we combine both the terms, then we get the SGX Nifty, which is actually a derivative of the Nifty trade index, officially trade in the Singapore Stock Exchange, one of the leading stock exchanges in Asia. It is important to note that not all the shares of the Nifty are traded here. The transactions on the SGX Nifty are settled in the Singapore Exchange.
SGX Nifty Market Time / Trading Time
The investors can trade in SGX from 6.30 AM to 11.30 PM, according to the Indian Standard Time (IST). It opens at 8 AM (according to Singapore Time). You know that trading on the NSE market can only be done for six and half hours i.e from 9.15 AM to 3.30 AM but you will be really surprised to know that the Nifty futures on the SGX are traded for 16 hours on the NSE stock market in India. Due to the difference in the trade timings, the Foreign Institutional Investors (FIIs) who are not able to access the Indian markets can trade in the SGX Nifty. For this purpose, they are not required to register with the Indian authorities.
Impact of SGX Nifty on NSE Share Market
Since SGX essentially means trading of Nifty futures on the Singapore Stock Exchange, it is quite obvious that it will affect the NSE share market. Due to the difference in the trading timings between the SGX and NSE, keeping a close tab on the movement of the SGX becomes extremely important to determine the initial direction of the NSE or Indian stock market. For instance, if SGX Nifty is 50 points positive, then it means that the NSE market will open in the green and vice-versa. Depending upon the SGX Nifty, most of the traders can either take the long or short positions.
As an investor, you can take prominent cues from the SGX Nifty to ascertain the market direction, then taking an investment decision accordingly. It is also important to note that NSE is also impacted by the domestic, financial and economic factors, so in reality, SGX Nifty has a very little impact on the NSE performance.