SGX Nifty vs. Nifty 50

Published on: Wed Mar 01 2023

Introduction:

SGX Nifty and Nifty 50 are two well-known financial instruments in the Indian stock market. SGX stands for Singapore Exchange, while Nifty 50 is an index of the National Stock Exchange (NSE) of India. This blog aims to explain/clarify the differences between SGX Nifty and Nifty 50, their features, and how they work.

What is SGX Nifty?

SGX Nifty is a futures contract traded on the Singapore Stock Exchange, which represents the Nifty 50 index of the Indian stock market. It allows/helps investors to speculate on the movement of the Indian stock market without physically owning any shares in India. It is a popular investment instrument among foreign investors who want to participate in the Indian stock market but are not able to do so due to regulatory restrictions or operational challenges.

What is Nifty 50?

Nifty 50 is an index of the National Stock Exchange (NSE) of India, comprising the 50 largest and most actively traded stocks on the exchange. It is widely used as a benchmark for the Indian stock market and is often used by investors/shareholders to track the performance of the Indian equity market. The index is calculated using a free-float market capitalization-weighted methodology, which means that stocks with higher market capitalization have a greater impact on the index.

Difference between SGX Nifty and Nifty 50:

Place of Trading: SGX Nifty is traded on the Singapore Stock Exchange, while Nifty 50 is traded on the National Stock Exchange (NSE) of India.

Trading Hours: SGX Nifty trades for longer hours than Nifty 50. SGX Nifty trading hours are from 6:30 AM to 11:30 PM (Singapore Time), while Nifty 50 trading hours are from 9:15 AM to 3:30 PM (Indian Standard Time).

Settlement: SGX Nifty is settled in Singapore Dollars (SGD), while Nifty 50 is settled in Indian Rupees (INR).

Liquidity: Nifty 50 is a much more liquid market than SGX Nifty due to its wider investor base and larger trading volumes.

Impact of Global Events: SGX Nifty can be influenced by global events and news as it is traded on an international exchange. On the other hand, Nifty 50 is more influenced/affected by local factors such as the Indian economy, political developments, and corporate earnings.

Advantages and Disadvantages of SGX Nifty and Nifty 50:

Advantages of SGX Nifty:

Foreign investors can participate in the Indian stock market without facing any regulatory restrictions/barriers or operational challenges.
SGX Nifty trades for longer hours, providing more flexibility to investors.
SGX Nifty can be used to hedge against the Indian market risk.

Disadvantages of SGX Nifty:

SGX Nifty is less liquid than Nifty 50, leading to wider bid-ask spreads.
The impact of global events on SGX Nifty can lead to high volatility and unpredictable price movements.

Advantages of Nifty 50:

Nifty 50 is a more liquid market than SGX Nifty, providing better pricing and narrower bid-ask spreads.
Nifty 50 is a benchmark index for the Indian stock market and is widely used by investors to track the performance of the Indian equity market.
Nifty 50 has a wider investor base, providing greater depth to the market.

Disadvantages of Nifty 50:

Nifty 50 trades for shorter hours than SGX Nifty, limiting the flexibility of investors.
Nifty 50 is subject to regulatory restrictions, making it difficult/hard for foreign investors to participate.

Conclusion:

In conclusion, both SGX Nifty and Nifty 50 are popular financial instruments used by investors to participate in the Indian stock market. SGX Nifty allows foreign investors to trade the Indian market without facing regulatory restrictions or operational challenges, but it is less liquid and more susceptible to global events. On the other hand, Nifty 50 is a more liquid market and widely used benchmark index for the Indian stock market, but it is subject to regulatory restrictions that limit foreign investor participation. Ultimately, the choice between SGX Nifty and Nifty 50 depends on the investor's investment objectives, risk appetite, and trading preferences.

Returns are subject to market risk.

Past performance do not assure future returns.

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