Synopsis
On February 3, the BSE launched Sensex derivative contracts at GIFT City, Gujarat, enabling foreign investors to trade India’s equity index with no currency conversion risks. These US dollar-denominated contracts will be traded on India INX, offering a minimum investment of $1 and various tax benefits.Key Takeaways
- Introduction of Sensex derivatives at BSE.
- Available for international trading without currency conversion risks.
- Denominated in US dollars with a $1 minimum investment.
- Trading window lasts 22 hours for global engagement.
- Tax exemptions available at GIFT City.
Mumbai, Feb 3 (NationPress) The Bombay Stock Exchange (BSE) has officially launched Sensex derivative contracts at the International Financial Services Centre (IFSC) located in GIFT City, Gujarat. This initiative enables foreign investors to engage in trading India’s primary equity index without facing currency conversion risks.
These contracts, which are valued in US dollars, will be available for trading on the India International Exchange (India INX), the BSE’s specialized exchange for GIFT-IFSC.
The minimum investment required for trading Sensex derivatives is just $1, with the final settlement occurring on the last Tuesday of the respective contract month.
Each contract will operate on a three-month trading cycle, with cash settlements conducted in US dollars.
Offering a 22-hour trading window, these contracts permit international investors to interact with Indian markets across various time zones.
GIFT City presents numerous tax advantages, including exemptions from securities transaction tax (STT), capital gains tax, and stamp duty.
The introduction of these derivatives is designed to provide global investors with a tax-efficient means to participate in the Indian market.
During the launch event, BSE Managing Director and CEO Sundararaman Ramamurthy highlighted that the competitive landscape of GIFT City will be beneficial for international investors.
The India INX reported an average daily turnover of $206 million for FY24-25.
In contrast, the National Stock Exchange (NSE) has been offering Nifty-based derivative contracts at GIFT City through a collaboration with the Singapore Exchange (SGX).
In July 2023, the SGX Nifty was transitioned to the NSE’s International Exchange (NSE IX) and rebranded as GIFT Nifty.
The GIFT Nifty has experienced significant growth, with an average daily turnover soaring to $95 billion in January.
At the end of the trading session, the BSE Sensex fell by 319.22 points, or 0.41 percent, concluding at 77,186.74, while the Nifty declined by 121.10 points, or 0.52 percent, to close at 23,361.05.
This downturn in the Indian stock market can be attributed to US President Donald Trump’s recent announcement of a 25 percent tariff on imports from Canada and Mexico, as well as a 10 percent duty on goods from China.
Trump defends these measures as essential for safeguarding American borders and mitigating illegal activities.
