Gift Nifty is a new derivatives index that is launched on July 3, 2023, by the National Stock Exchange of India (NSE) in its International Financial Services Centre (IFSC) at GIFT City, Gujarat. Gift Nifty is a dollar-denominated futures contract based on the Nifty 50 index, and is traded on the NSE IFSC exchange.
The launch of GIFT Nifty is expected to make it easier for foreign investors to trade in the Indian stock market. Currently, foreign investors can only trade in the Indian stock market through the NSE or the Bombay Stock Exchange (BSE). However, the NSE and the BSE are located in India, which can make it difficult for foreign investors to trade during Indian business hours.
GIFT Nifty is regulated by SEBI, which means that investors will have the same level of protection as they do when trading in Nifty futures contracts on the NSE.
Gift Nifty will be trading from 06:15 in the morning to 02:45 of the next day with 25 minutes break between 16:00 to 16:25 hours. Effectively it would trade approx 16 hours a day so that all effect of all other global markets will be captured in it.
There are several reasons why foreign investors prefer to trade in Gift Nifty. Firstly, Gift Nifty will be traded in USD US Daollar, which will eliminate the foreign exchange risk that foreign investors face when trading in Nifty. Secondly, Gift Nifty will be traded in the IFSC, which is a tax-free zone. This means that foreign investors will not have to pay any taxes on their profit from trading in Gift Nifty.
There are a number of benefits to trading in GIFT Nifty like :
- Convenience: GIFT Nifty is traded in the US dollar, which makes it easier for foreign investors to trade.
- Liquidity: GIFT Nifty is expected to be very liquid, which means that there will be plenty of buyers and sellers. This will make it easier to trade GIFT Nifty and get a good price.
- Tax benefits: Foreign investors who trade in GIFT Nifty may be eligible for tax benefits.
- Regulations: GIFT City is a SEZ, which means that it has simplified regulations. This can make it easier for foreign investors to trade in GIFT Nifty.
- Long Trading Hours: Gift Nifty will be traded 21 hours a day. This will give investors more flexibility and allow them to trade at times that are convenient for them.
The launch of GIFT Nifty is a positive development for the Indian market. It is expected to attract more foreign investment, boost the Indian economy, and make it easier for Indian companies to raise capital.