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SGX Nifty and Its Impacts on the Indian Stock Market

Every intraday trader in India will check SGX Nifty before the market opens like a ritual practice. The search query ‘SGX Nifty Live’ hits its peak between 9.00 AM to 9.15 AM in Google. It indicates two things –


  1. SGX Nifty plays a vital role in the stock market and

  2. Many traders are looking at SGX Nifty Futures to gauge the open levels in Nifty (NSE) and to manage their open action trades


In fact, many business news channels dedicate 1-2 hours (before the market opens) to discuss the SGX Nifty future levels and how it can affect the Indian market on that particular day. This post will discuss all the details about SGX Nifty and how it affects the Indian share market.


Table of Contents



What is SGX Nifty?


Image – SGX Nifty chart from https://sgxnifty.org/

SGX Nifty contains two words – ‘SGX’ and ‘Nifty.’


‘SGX’ is the acronym for Singapore Stock Exchange.


‘Nifty’ is the index of the National Stock Exchange (NSE) of India. It is calculated by taking the weighted value of the top-50 stocks listed on NSE.


To sum up, ‘SGX Nifty’ is the Indian Nifty Futures trading on the Singapore Stock Exchange.


SGX Nifty Trading Hours

Image – SGX Nifty Timings (Source: SGX Nifty)

The above image shows the trading hours of SGX Nifty.


Please note, the trading hours mentioned in the image are Singapore time, and the difference between Indian Standard Time (IST) and Singapore Time (SGT) is 2 hours & 30 minutes.


In Singapore, Nifty trades in two sessions. The first part is denoted by ‘T,’ and the second part is indicated by ‘T+1’.


The first session (T) of SGX Nifty timings is 9.00 AM – 6.10 PM SGT (or 6.30 AM to 3.40 PM IST).


The second Session (T+1) of SGX Nifty timings is 6.40 PM – 5.15 AM (or 4.10 PM to 2.45 AM IST).


SGX Nifty has two serial monthly contracts, and it also has quarterly contracts. All the contracts expire on the last Thursday of the corresponding month.




Where to Check the SGX Nifty Live Chart?


Below are the 3 reputed sources to check SGX Nifty futures live chart:


1. SGX Nifty

2. Money Control

3. Trading View


Among these three resources, SGX Nifty provides accurate information.



How to Trade SGX Nifty from India?


Any trader interested in trading in Nifty, but don’t have access to the Indian market, can trade in SGX Nifty. FIIs and many prominent hedge funds with significant exposure in the Indian market use SGX Nifty to hedge their position (due to its extended time zone and liquidity behavior).


However, if you have Indian citizenship, you are not allowed to trade in SGX Nifty contracts. In fact, Indian citizens are not permitted to trade derivatives in any other country. But any Indian NRI is permitted to trade in SGX Nifty.


Both ‘Nifty’ and ‘SGX Nifty’ receive high volumes of transactions, and both are liquid trading instruments. In India, ‘Open Interest’ means "number of shares" outstanding in Nifty. Whereas, in Singapore, it means "number of contracts" outstanding.



Contract Size in SGX Nifty


The contract size in Indian Nifty is 75 shares per lot. However, SGX Nifty doesn’t come with a fixed contract concept. SGX Nifty is denominated in terms of US Dollars (USD).


For example, if the Nifty is trading at 14000, then the contract size of SGX Nifty will be 14000 X 2 = 28000 USD.


If Nifty moves up by 200 points in a trading day, then the profit will be 200 rupees per share. Hence, total profit will be 200 x 75 = Rs 15,000. However, in SGX Nifty, profit will be 200 x 2 = 400 USD per contract.



SGX Nifty Margin Requirements


Image – SGX Nifty Margin Requirements Page

The above image shows the page of Margin Requirement details to trade in SGX Nifty (sgx.com -> Derivatives -> Margin Schedule)

Image – SGX Nifty Margin Requirements (from Jan-2021)

The above image indicates the margin required (column ‘K’ and ‘L’) to trade in SGX Nifty.



How SGX Nifty affect the Indian Market?


SGX Nifty gives the first indication of where the Indian markets will open on any trading day. If the SGX Nifty is positive, on most of the day, Nifty will also see a positive opening and vice versa.


SGX Nifty will be open even after the closure of the Indian market. Hence any impact due to a global incident will be reflected directly in it. The next day, Indian markets take clue SGX Nifty and show the appropriate open.

 

© 2020 by Indrazith Shantharaj.