Stock Market: A Must Know Introduction To SGX Nifty

SGX Nifty In Simple Words!

SGX Nifty for pro-active position making in NSE Nifty.

Stock-Market-A-Must-Know-Introduction-To-SGX-Nifty
Courtesy of unsplash.com

I am sure after reading the last blog post Trade Like A Casino, you readers are now have learned and added something new to your knowledge base. The post was more focused on how one should play a hand in the market more intelligently.

 

Well, today I have a very interesting topic to write about. It has been there for a long, however, few traders still have doubts about how to read it and use it for their own positions in the market.

 

Let’s talk about SGX Nifty!

What is the SGX Nifty?


We do have an edge if we know what are the advantages of carefully observing the closing and position of the SGX nifty before making any new entry or position in a NSE Nifty.

 

SGX Nifty is a derivative product of NSE Nifty50. It has the same companies listed on the Singapore Exchange as Nifty50.


Does that mean Indian residents can trade and take positions in the SGX Nifty?? The answer is NO


SGX Nifty is a gateway/backdoor for non-resident Indians(NRI) to invest in NSE Nifty50. It’s profitable to both Singapore exchange as well as NRI’s and foreign investors. Hence only NRI’s and FII(Foreign Institutional Investors) are allowed to invest in it.


The currency it uses for trade is the US dollar. Simply because USD is a widely used and accepted currency.

Trading Hours of SGX Nifty?


Trading hours of the SGX Nifty are long compared to Indian Nifty50. It trades in T(Day Trading) and T+1(Evening Trading) twice a day for sixteen hours. Singapore time is 2 hours and 30 minutes ahead of the Indian Standard Time.


Below are trading hours of the Derivatives segment taken from Singapore Exchange’s official site: sgx.com


Stock-Market-A-Must-Know-Introduction-To-SGX-Nifty
Courtesy of sgx.com

When converted the timings of trading hours of SGX Nifty50 Options in Indian Standard Time, we get windows T(6.30AM-3.45PM) and T+1(4.10PM-2.45AM).


For SGX Nifty50 Index Futures, the windows are T(6.30AM-3.40PM) and T+1(4.10PM-2.45AM).

What is the importance of SGX Nifty?


Due to such long trading hours, SGX Nifty is volatile in nature as it gets affected by global economic cycles and political events.


The advantage of the trading windows is when any good or bad news comes after the closing of the Indian market, the impact will be seen in SGX Nifty and the next day on NSE Nifty50. 


Hence you will get an idea of how NSE Nifty50 will react and ultimately what positions to take for trade. So this is the exact connection between SGX Nifty and NSE Nifty50. This gives you the idea to deal with your trades.


This is how FII's hedge and play with their positions taken in NSE Nifty50 and manage through SGX Nifty. Hence there is not a question that SGX Nifty is so popular amongst foreign traders and investors. SGX Nifty is the cash cow for Singapore.

Profit Calculation in SGX Nifty!


Profit calculated in SGX Nifty = 2 USD x Nifty Price Points Up/Down

 

It does not have number of shares in a lot or contract, like in NSE Nifty we have 50 shares in a lot. Open Interest is in a number of contracts in SGX Nifty.

 

For example, if the Nifty moves up by 100 points for the day, then make a profit of 100 rupees per share. Therefore, the total profit in the case of Nifty will be 100*50 = INR 5000 a Lot. But in the case of SGX Nifty, we will be making a profit of 100*2 = 200 USD per contract.

Where To Check Closing?


For proper closing of SGX Nifty, we can check using investing.com or moneycontrol.com or Singapore Exchange site(sgx.com)


We can see differences in the closing prices and the reason for that is investing.com updates the prices only till 11.30 at the night. So it will be great if we rely on moneycontrol.com or sgx.com.


We have seen traders who keep watching SGX Nifty closing at night. There is no point in depending too much on it. Just use it as a signal to prepare your action plan in advance before entering the NSE Nifty market.


Don’t think that both the nifty products will show you the exact closing just because SGX Nifty is the derivative of NSE Nifty. Due to extra trading hours of SGX Nifty closing will be a different level lot of the time of both the nifty.


Latest Update:


Trading in Indian Derivative for foreign funds through Singapore Exchange will be having access to live price feeds of Nifty from International Financial Services Centre(IFSC). On 22nd OCT 2021, NSE launched the data connectivity with SGX through IFSC, thus foreign traders will now be having real-time data.


NSE had cancelled the data-sharing agreement with SGX back in 2018 due to which the SGX traders received only the end of the day price information and all the real-time price data feeds were not available to them.


FII's now would be able to fine tune their trading strategies in preparation for the connect to go live.


Reference: The Economic Times


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KEY TAKEAWAYS

  • SGX is Singapore Stock Exchange(SGX:S68).
  • SGX Nifty is a derivative product of the NSE Nifty.
  • It is for NRI's, Indian residents cannot trade in it.
  • Helps you get the NSE Nifty behavior in advance.
  • Trades for sixteen hours, twice a day with USD as currency.

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