SGX Full Form: Meaning and Definition of SGX

Meaning of SGX Nifty

SGX Nifty is a derivative of Nifty index that is traded on the Singapore Exchange (SGX). It is a futures contract where the price of Nifty 50 index is set in advance that allows investors to secure this price for future transactions, even if the actual market price changes later. Just as Nifty 50 index trades on India’s NSE (National Stock Exchange), SGX Nifty trades on Singapore’s stock exchange. 

SGX Nifty is beneficial for investors as it helps them predict potential financial movements in the Indian Nifty 50 index and provides an insight into how Indian market might behave even before the Indian stock market opens for trading. 

How is SGX Nifty Different from Indian Nifty?

• SGX Nifty is a futures trading platform on the Singapore Exchange (SGX) where prices are predetermined to manage future risks. In contrast, the Indian Nifty 50 is an index traded only on the National Stock Exchange (NSE) in India.The index value reflects the real-time performance of the constituent stocks on the NSE.
• SGX Nifty does not require a specific contract size, whereas the Indian Nifty involves contracts with a contract lot size of 50.
•  SGX Nifty operates for 16 hours a day, making it highly active and accessible outside Indian market hours. Indian Nifty, however, trades only for six and a half hours during NSE’s operating hours, generally from 9:15 AM to 3:30 PM IST on trading days.

Advantages and Disadvantages of SGX Nifty 

Advantages:

• SGX Nifty draws more foreign investors to invest in the Indian derivative market.
• The close location of India and Singapore facilitates better connectivity between the two exchanges and reduces time lapse.
• SGX Nifty provides an alternative way for investors to engage with Indian markets if they prefer transactions in US Dollars and cannot access Indian markets directly.
• The 16-hour trading window of SGX Nifty allows for more flexible transactions, benefiting hedge funds and other investors.
• The 16-hours timing enable market participants to react to overnight developments in global markets like Wall Street, improving their investment decisions in Indian market.

Disadvantages:

• SGX Nifty is more volatile than NSE Nifty due to its sensitivity to global economic trends and political events.
• Indian residents are not allowed trade SGX Nifty contracts.
• NSE Nifty operates from 9:15am to 3:30pm IST having a trading window of 6.5 hours whereas SGX Nifty trades from 6:30am to 11:30p, having a 16-hour trading window ensuring that the impact of global events is more advanced on stocks traded as compared to NSE Nifty.
• Traders often use SGX Nifty futures for early insights and decisions, as it provides an advanced view of market trends.