SGX Nifty: meaning and connection with Nifty

 Globalisation has touched every aspect of the financial space including how we trade in stocks. That is to say, if you are a resident of a foreign country looking to invest in Indian stocks, you can do it. This is the essence of SGX Nifty, a derivative of Nifty, the Indian benchmark index. Moreover, SGX Nifty index is also known to indicate how the Indian stock markets would perform.

But by nature, a stock market is volatile. Then how can SGX Nifty indicate the performance of the Indian stock market for a given day? Let us find out that and more about a benchmark index in this article.

What is a benchmark index?

A benchmark index is an important indicator of how a group of stocks traded on an exchange performs. It consists of several stocks, that either belong to all the sectors or a specific segment of the economy. Depending on the stocks it represents, a benchmark index thus indicates the performance of the overall stock market or the respective sector.

For instance, Nifty or Nifty 50 is the benchmark index of the National Stock Exchange of India (NSE). It shows the average performance of the top 50 listed domestic companies belonging to 17 different sectors listed on the stock exchange. Likewise, there are other benchmark indices such as Nifty 500, Nifty Midcap 100, Nifty Smallcap 100, and so on. 

Now that you know the importance of a benchmark index, we shall dive right into the subject: SGX Nifty.

SGX Nifty meaning

SGX Nifty stands for the Singapore Stock Exchange and allows traders from across the globe to invest in Indian derivatives listed on the NSE via the Singapore Stock Exchange. Thanks to this, Indian derivatives receive investments from foreign nationals as well.

Features of SGX Nifty index

Following are the characteristics of the SGX Nifty index:

• Trade transactions done on the SGX Nifty are settled in the Singapore Stock Exchange
• SGX Nifty operates for 16 hours whereas NSE trades only for 6 and a half hours. The SGX Nifty timings are from 6:30 IST to 23:30 IST
• Longer trading hours maybe one of the reasons why SGX Nifty is more volatile than its Indian counterpart, NIFTY

Does SGX Nifty really affect Nifty?

SGX Nifty opens for trading at 8 am as per Singapore timing, which is much earlier than when investors start transacting on the Indian stock exchanges. Also, SGX Nifty trades for longer hours compared to Nifty, which means it is highly sensitive to global developments. This is why SGX Nifty live quotes are presumed to be an indicator of how Nifty 50 might perform in the Indian stock markets.

However, stock markets are highly sensitive to both domestic and global economic and business factors. Therefore, it is safe to say that SGX Nifty cannot influence its Indian counterpart Nifty heavily. In fact, the performance of both the indices are independent of each other. That said, it would be smart to not base your investment decisions heavily on the SGX Nifty alone.