The SGX Nifty and the difference between S and P CNX Nifty and Nifty
What is SGX Nifty? SGX or Singapore Exchange is one of the main stock exchanges in Asia, a movement that is somehow reflected in other stock market indices on the continent. SGX Nifty is the Singapore Stock Exchange Nifty, which means that the Indian CNX Nifty is listed on the Singapore Stock Exchange. It is a very popular derivative product of the Singapore Stock Exchange as it allows foreign investors to take positions in the Indian market.
On the Singapore Stock Exchange, Indian stocks cannot be traded, but it allows future products such as SGX Nifty Futures. Therefore, it is the derivative product of the Singapore Stock Exchange that facilitates futures trading of the underlying NSE Nifty Index. It allows FIIs and others to invest in Nifty Futures. Since trading is for the NSE Index, Singapore Nifty is settled based on the closing price of the NSE Index (S&P CNX Nifty) price. Trading Hours – There are two types of contracts on SGX with different settlement periods:
one. E – SGX QUEST (T) With settlement on the same day, hours: Monday through Friday, from 9:00 am to 6:15 pm
two. E* – SGX QUEST (T+1) With Settlement after one day, Hours- Mon-Fri- 7.15PM-1AM
These two contracts have different trading times, allowing traders from all over the world to trade on SGX even if the market is closed. FII investment in Indian futures contracts through SGX Nifty and India is 2.5 hours behind Singapore. SGX opens at 9:00 am in Singapore, which is 6:30 according to IST. Therefore, by tracking the Singapore Nifty, we can predict the initial direction of the Indian stock market.
Difference between Singapore Nifty and NSE Index (S&P CNX Nifty)-
The SGX-Nifty product is denominated in dollars, providing foreign traders or investors with direct currency protection when using SGX products for hedging. While in the case of Nifty Futures, a foreign investor has to combine a position in Nifty Futures with a position in the dollar-rupee futures market.
Foreign investors have to go through a variety of complexities to access the Indian Nifty, hence the dollar and rupee forward market. Margins on SGX products are lower than NSE.
How SGX- Nifty Affects the Indian Stock Market–
The Singapore market opens around 2 hours earlier than the Indian market and is directly related to the NSE market. It moves relative to the Indian Nifty, therefore it is used as a tool to predict the Indian market that provides an initial direction to the Indian market. Also, both India and Singapore are located on the same continent, which correlated both markets and more often one decides the sentiments of the other market. That is why it becomes easy for Indian financial and advisory institutions to give trading recommendations on SGX Nifty.