Understanding SXG Nifty meaning & its impact on Indian share market: If you are an active stock market trader in India, I’m sure that you would have definitely have heard of the term ‘SGX Nifty’. If you open any business news channel, then before the opening of the Indian equity market, all you will see is an hour-long discussion on the SGX Nifty and its implications on the opening of the Nifty for that day.
The importance of understanding this terminology can be seen from the fact that it is one of the most popular hashtags followed or searched over different social media platforms like Twitter, if one wants to have a better picture of the Indian Equity market. In this post, we are going to discuss what exactly is SGX nifty and how it affects Indian share market.
What is SGX Nifty?
The word SGX is an acronym for the Singapore Stock Exchange. Further, Nifty is the benchmark index of the National Stock Exchange (NSE) of India and it is comprised of the top 50 companies listed on NSE. Overall, if we were to add these two constituents, we can say that SGX Nifty is the Indian Nifty trading on the Singapore Stock Exchange. It is an actively traded futures contract on Singapore Exchange.
Who is allowed to trade SGX Nifty?
Any investor who is interested in trading Nifty, but is not able to access Indian Markets, finds trading SGX Nifty a very good alternative to trade. Even the big hedge funds who have big exposure in the Indian market find SGX Nifty as a good alternative to hedge their positions.
Further, an Indian citizen is not allowed to trade SGX Nifty contracts. For that matter, Indian citizens are not allowed to trade derivatives in any other country.
Difference between Nifty and SGX Nifty?
1. SGX nifty is Nifty futures contract trading in Singapore Stock Exchange and in India, Nifty contract trades on NSE.
2. The contract size of SGX Nifty is different compared to Nifty. In India, we have 75 shares in every Nifty contract Lot whereas the SGX nifty does not have a contract with shares in it. SGX Nifty is denominated in terms of US dollars. Say, if Nifty is trading at 9500, then the contract size of SGX Nifty will be 9500*(2 USD) i.e., 19000 USD.
For example, if the Nifty moves up by 100 points for the day, then make a profit of 100 rupees per share. Therefore, total profit in case of Nifty will be 100*75 = Rs 7,500. But in the case of SGX Nifty, we will be making a profit of 100*2 = 200 USD per contract.
3. Now, In India, in the case of Nifty, we see Open Interest as the ‘number of shares’ outstanding. But in the case of SGX Nifty the Open Interest shows the ‘number of contracts’ outstanding. Both Nifty and SGX Nifty are highly liquid and a very high volume of trading happens in that.
Also read: What is India VIX? Meaning, Range, Implications & More!
Trading Hours of SGX Nifty
(Source: SGX Nifty)
The above figure is the value of SGX Nifty from the website on the Singapore Stock Exchange. It shows the value of SGX Nifty futures traded on SGX. In Singapore Nifty trades in two tranches. One part during the day time and it is denoted by ‘T’ (as seen in the picture above). The other half during the evening time and it is denoted by ‘T+1’. The trades happening in the evening will be considered in the next day settlement prices.
(Source: SGX Nifty)
Now, the above picture gives you details about the trading hours of SGX Nifty. The Trading hours mentioned here are Singapore time and the difference between Indian Standard Time and Singapore time is 2 hr 30 minutes. Therefore, we can see that in the Morning (T) session, it trades from 9 am to 6:10 pm Singapore Standard time.
So, in Indian Standard time, the trading happens at SG Nifty from 6:30 AM to 3:40 PM. And the Evening (T+1) session, it trades from 6:40 pm to 5:15 am Singapore Standard Time, which if converted to Indian Standard time will have timings of 4.10 pm to 2:45 am.
Contract Settlements in SGX Nifty
SGX Nifty has two serial monthly contracts and it has Quarterly contracts. The contract expires on the last Thursday of Every expiring month and if the last Thursday is an Indian holiday, then it expires the preceding business day. The SGX Nifty contracts are cash-settled and the final settlement price is derived from the official closing of S&P CNX Nifty.
How SGX Nifty Impacts Indian Equity Market?
Looking at the current global scenario, with the continuous onslaught of COVID-19 pandemic or the rising tensions between US-China over trade deal, we see a continuous inflow of information and news. And these inflow of information has a direct impact on the Global Financial markets.
SGX Nifty still trading way after the closure of the Indian Nifty market, we see an impact of these global news on the SGX Nifty price movement. This further directly impacts the opening pricing of Nifty, the very next day. And that is one of the reasons we see the Indian Nifty market opening at a premium or discount over the previous day’s close.
Note: Many analysts use SGX Nifty as one of the factors to predict whether the Indian stock market will open higher or lower on a trading session.
In this post, we explained what is SGX Nifty and its impact on Indian share market. The SGX Nifty is a perfect substitute for investors and traders looking to trade in the Indian equity market but are not able to do so. It is a perfect hedging instrument if you are already exposed to the Indian equity market.
One unique advantage that SGX Nifty has longer trading hours compared to the Indian Equity market. And all these points make it a lucrative investment and trading avenue.
Hitesh Singhi is an active derivative trader with over +10 years of experience of trading in Futures and Options in Indian Equity market and International energy products like Brent Crude, WTI Crude, RBOB, Gasoline etc. He has traded on BSE, NSE, ICE Exchange & NYMEX Exchange. By qualification, Hitesh has a graduate degree in Business Management and an MBA in Finance. Connect with Hitesh over Twitter here!
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loved the blog
Thanks for your support and appreciation
Article for the most useful information….
Very Useful Information
Your explanation about sgxnifty cleared all my doubts. Thanks.
I was curious about how sgx nifty affects indian market . I got cleared my all doubts here. Thanks a lot sir. Keep informing us.
Very nicely explained and very much informative.
Do the sgx nifty indicate at what price, specific stocks are going to open the next day in india?
can you please also add how govt plays an important role in attracting FPIs. Since Singapore Govt is way ahead in policy making for stock market compare to Indian Govt. It is a suggestion
Excellent explanation given
Glad you liked it 🙂
Thanks for detailing, so in my understanding index is trading in SGX not stocks from Nifty 50, right? But then my question is, in a telegram channel, they used to send few stocks (like, wipro, infosys, tatam, drreddy and few others) SGX prices in dollars..!!! It made me confused, as per them wipro $4.21/ drreddy $59.83, message posted on 21-08-2020 11:06PM. I have googled a lot couldn’t find anything, appreciated your reply.
Because it listed in dow jones index not in india
Loving each blog from Trade Brains.
Hi, very very useful blog.
Could you please tell me how much SGX charges per transaction of SGX NIFTY contract?
IF SOMEONE TRADES IN SGX NIFTY THEN HOW IT IS GOING TO BE TAXED? ARE THEY GOING TO BE TAXED AS PER INDIA OR SINGAPORE TAX LAWS?
I am still unable to figure out how SGX nifty determine its price, what factor affecting its volatility. like in Indian nifty we see fluctuation in 50 shares then nifty index moves accordingly, as Singapore nifty trades only in Nifty Index and not in any 50 share, then how it fluctuate.
The Price in SGX Nifty is directly influenced by the performance of Nifty50 companies. The only difference is the trade timing. Indian market operates between 9:15 am to 3:30 pm. and SGX nifty trades longer hours. And hence the gap up or gap down opening in the Indian Nifty market. And volatility is impacted by both technical and fundamental factors. I hope this answers your query.
very informative Thanks a lot
Thanks for sharing knowledge.
Very good explanation, when I heard about SGX Nifty in youtube channels, it was not clear, on the relation and impact of SGX Nifty on Nifty. Thanks a lot for clear explanation. If possible, pl. add more articles, which explains the various factors that a stock analyst takes into consideration.
Hello Hitesh bhai,
Very good information regarding sgx nifty. But very small query i want to know is if sgx nifty is impacted by nifty and nifty is also affected by sgx nifty then why there is a large difference of value between them of 150-200 points sometimes.
ट्रेडिंग का एक सही तकनीकी तरीका और स्टेटर्जी आपने बताई…
very useful information. thank you
Like Bitcoin, why not sgx nifty runs 24*365 days?
Very nicely explained and very meaningful.
I wish to know when and how the purchased price of SGX NIFTY come in NSE and impact the actual stock price of NIFTY 50 stocks at NSE? Similarly when and how the sold price impact the actual NIFTY 50 stocks at NSE?
agree that SGX NIFTY is a good indicator for the opening predictions of the NIFTY (indian market) but my main question is that is a correlation possible between both of them during market hours exactly after the opening till 3:30 pm
How SGX Nifty is deriving value from NIFTY50 index after NSE trading hours; given than underlying(NSE) is closed earlier than SGX trading hours.
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