GIFT Nifty Contract Specifications: $2 per Point Explained

Introduction

In the high-stakes world of index derivatives, one contract has gained international significance: GIFT Nifty Futures. For many traders it’s referenced as a “$2 per point” contract — but what does that mean, and how exactly does it work? In this blog we’ll break down the contract specifications, show how to calculate value, examine the benefits and risks, compare with domestic Nifty futures, and help you understand whether it fits your trading or hedging strategy.

What is GIFT Nifty?

Definition & Background

The term GIFT Nifty refers to futures (and options) contracts based on the Nifty 50 index, denominated in US dollars, and traded on the NSE International Exchange (NSE IX) under the jurisdiction of the GIFT City (Gujarat International Finance Tec-City) in India. Online NIFM+1
Previously the offshore version was called SGX Nifty. With the shift of offshore derivatives into India’s GIFT City, GIFT Nifty became a key vehicle for global participation in Indian equity index derivatives. Wikipedia+1

Key features

• Underlying asset: Nifty 50 index (top 50 large-cap Indian companies)

• Denomination: US dollars. Unlike domestic Nifty futures (INR), GIFT Nifty uses USD. EBC Financial Group

• Trading hours: Extended global hours to cater to international participants. Online NIFM

• Cash-settled: No physical delivery of stocks; settlement happens in cash. giftcitynifty.com

“$2 per Point” – What Does That Mean?

Contract multiplier explained

When market participants say “$2 per point”, they refer to the contract size/ multiplier of the futures contract. Put simply: for every index point movement in the Nifty 50 underlying, one contract’s value changes by USD 2.
For example, if Nifty goes up 100 points → contract value increases by 100 × $2 = $200.

Source of the multiplier

According to the contract specifications for GIFT Nifty futures:

“Lot size : US$ 2 × Nifty 50 Index” and “Tick Size : US$ 0.5” giftcitynifty.com
Another specification for the previous SGX version:
“Contract Size, USD 2 times Nifty 50 Index” Barchart.com

Thus the “$2 per point” phrase is shorthand for “USD 2 × Index points”.

Why the multiplier matters

• It determines profit or loss per point of movement

• It determines the notional value of the contract

• It impacts margin requirements and risk exposure

Contract Specifications in Detail

Here we summarise the key specifications.

Example Calculation

Suppose Nifty 50 = 22,000 points.
Then: Contract value = 22,000 × USD 2 = USD 44,000.
If Nifty moves +100 points, profit = 100 × $2 = USD 200.
If you hold 5 contracts, that’s USD 1,000 for 100-point move.

GIFT Nifty vs Domestic Nifty Futures

Key Differences

• Currency: GIFT in USD; domestic Nifty in INR.

• Trading Hours: GIFT runs ~21 hours; domestic Nifty only Indian market hours. NiftyTrader

• Audience: GIFT targets global/international investors; domestic futures for Indian retail/institutional.

• Regulation & platform: GIFT trades on NSE IX (IFSC at GIFT City); domestic trades on NSE India.

• Use Case: GIFT often used for global hedging, arbitrage; domestic used for retail speculation and hedging Indian exposures. EBC Financial Group+1

Why traders watch GIFT Nifty

Because it trades outside Indian cash market hours and reflects global sentiment, many traders use GIFT Nifty as a pre-market indicator for the Indian market. A strong move in GIFT may signal how Nifty will open in the regular session. 5paisa

Advantages of Trading/Using GIFT Nifty

• Extended hours: Access to Indian index exposure during global market hours.

• Dollar‐denominated: Useful for hedging foreign currency/investment flows.

• Global investor access: Facilitates participation of foreign and institutional players.

• Hedging tool: Indian investors may hedge foreign exposures or global traders hedge Indian exposures.

• Liquidity: As a major index future, GIFT may offer deep liquidity.

Risks and Considerations

Leverage intensifies risk

Because the multiplier ($2 per point) means small index moves can translate into large dollar value changes. Example: A 500-point adverse move = $1,000 per contract.

Currency risk

If you’re converting USD profits to INR, fluctuations in USD/INR affect net returns.

Regulatory and access limitations

Indian retail traders may face restrictions or may need specific broker/IFSC access. EBC Financial Group

Global macro sensitivity

Because GIFT trades many hours globally, it is influenced by global events (US data, forex, geopolitics) — which may not always correlate with Indian cash markets.

Contract size still large

Although $2 multiplier is smaller than some domestic lot multipliers in INR, the notional value is still large (e.g., 22,000 points × $2 = $44,000).

Expiry & rollover risk

Futures expire (monthly/quarterly) — traders must manage roll-over risk and cost.

How to Use GIFT Nifty in Trading or Hedging

For speculation

• Buy (go long) if you expect Nifty to rise.

• Sell (go short) if you expect Nifty to fall.
  Each index point movement = $2 × number of contracts profit/loss.

For hedging

• An Indian investor with large portfolio exposure to Indian stocks might use GIFT Nifty to hedge overnight risk when domestic market is closed.

For cross-market arbitrage

• Global funds might use GIFT for arbitrage between Indian index moves and international sentiment.

Example trade

You expect Nifty to rise by 150 points overnight:

• Enter 1 GIFT contract at index 22,000.

• Anticipated move +150 points = profit $300.

• Manage margin, stop-loss and exit accordingly.

Practical Tips & Checklist

• Choose broker that provides access to NSE IX / GIFT City derivatives.

• Understand margin requirement and cash settlement process.

• Manage currency risk if you convert USD to INR (or your base currency).

• Use stop-loss given high leverage.

• Monitor global markets since trading extends nearly 21 hours.

• Track expiry dates – monthly, quarterly – roll accordingly.

• Compare contract multiplier and equivalent domestic lot size to understand exposure.

• Keep updated on regulatory changes (IFSC, international participation, etc.).

Why the “$2 per point” Specification Might Vary

Note: While many sources refer to “$2 per point”, always check the latest contract specification from NSE IX or your broker. Some sources indicate lot size in units, others in dollars. For example: “Lot size : US$ 2 × Nifty 50 Index” is cited for GIFT Nifty. giftcitynifty.com Some older spec sheets show different multipliers for SGX version. Singapore Exchange

FAQs (Frequently Asked Questions)

Q1: Is GIFT Nifty the same as Nifty 50?
A: No — though based on the same underlying index (Nifty 50), GIFT Nifty is a futures contract traded in USD at NSE IX, whereas Nifty 50 is the cash index and its domestic futures are INR-denominated. Online NIFM

Q2: Can an Indian retail trader legally trade GIFT Nifty?
A: Retail access may be limited depending on your broker and regulatory conditions. Some sources note Indian retail may face restrictions under LRS. 5paisa

Q3: How much money do I need to trade one GIFT Nifty contract?
A: This depends on margin requirement (which varies by broker, volatility, position size). Given large notional value (e.g., 22,000 × $2 = $44,000), margin might be a fraction (e.g., 5–10%) but you should check with your broker.

Q4: Why track GIFT Nifty if I’m trading domestic Indian markets?
A: Because it trades globally, GIFT Nifty often acts as a pre-market indicator for Nifty 50 when Indian markets open — giving a clue to sentiment. NiftyTrader

Q5: What happens when the contract expires?
A: The contract is cash-settled at expiry based on the underlying index value. You either make profit or loss depending on the index movement and your position. giftcitynifty.com

Conclusion

Understanding the contract specification of GIFT Nifty — especially the “$2 per point” multiplier — is essential for serious futures traders, hedgers, and global investors. From knowing how much your profit or loss per point will be, to comprehending extended trading hours and USD-denomination, each detail matters.

If you plan to trade or hedge using GIFT Nifty, ensure you’re aware of the notional value, margin requirements, currency risk, and expiry mechanisms. Use this instrument judiciously — the leverage is powerful, but so is the risk. With the right knowledge, GIFT Nifty can be a potent tool for global exposure to Indian equity markets.