Gift Nifty futures volumes soar 25% in 4 months to $82 billion in April

In rupee terms, the turnover of futures in April amounted to ₹6.85 lakh crore, while the turnover of Nifty futures on NSE stood at ₹3.99 lakh crore.

The open interest in Gift Nifty is nearly double that of the domestic Nifty as there are better arbitrage opportunities between Gift Nifty and local markets, particularly in index arbitrage scenarios, analysts said.

, previously traded on the Singapore Exchange's platform, shifted to NSE IX on July 3, 2023, and was renamed Gift Nifty.

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In July, Gift Nifty futures saw a turnover of $57 billion, or ₹4.7 lakh crore, and remained almost stagnant between August and December at around $65 billion, or ₹5.4 lakh crore, a month. In January, the turnover jumped 12% month on month to $74 billion, or ₹ 6.1 lakh crore, and in February saw another 6% jump to $78 billion, or ₹6.5 lakh crore. Nifty Future volumes on the NSE declined from ₹4.62 lakh crore in January to ₹3.99 lakh crore in April.

Foreign institutional investors () tend to prefer on Gift Nifty for several reasons including anonymity, convenience, and availability of higher leverage, analysts said.

"Anonymity is a key factor for FPIs (foreign portfolio investors) as trading on Gift Nifty allows them to operate without disclosing their identity," said Abhilash Pagaria, head of Nuvama Alternative & Quantitative Research. "Additionally, it offers convenience as FIIs can access Gift Nifty through any prime broker connected to SGX, eliminating the need for establishing relationships with brokers in India," he said.

"Furthermore, global brokers often provide FIIs with better leverage compared to what is available under Indian regulatory constraints, and this access to leverage can enhance trading strategies and potentially amplify returns for FIIs operating in the Gift Nifty market," Pagaria added.

The Indian government has been making efforts to attract foreign investors to Gift City, which offers minimum tax, dollar contracts, and top-notch infrastructure. Gift Nifty is traded for nearly 21 hours a day, which overlaps with trading hours in Asia, Europe, and the United States.